Govt. to Push Spending

In a week in which the Central Bureau of Statistics (BPS) reported third-quarter growth of 6.5%, the finance ministry said the government will push funds into the economy in the final quarter to further boost economic activity.

The Investment Coordinating Board (BKPM) announced on Tuesday (13/11/07) that actual foreign investment had doubled in the first 10 months while actual domestic investment rose by 144%.
The Finance Ministry said in a statement that Indonesia expects to accelerate budget spending in the fourth quarter to meet its budget target of a 1.5% surplus over GDP.

The ministry said the government posted a budget surplus of Rp17.6 trillion ($1.92 billion) in the first 10 months of the year, Reuters reported.

As of October, the government had spent Rp506.6 trillion against targeted full-year spending of Rp752.4 trillion, while revenue stood at Rp524.3 trillion compared to a full-year target of Rp694.1 trillion.

Coordinating Minister Boediono underlined the need for more spending on infrastructure in order to maintain competitiveness. In an interview with Bloomberg, he said that “from the supply side, it is a key'' to keeping inflation under control.

“I think the main issue here is how to beef up our capacity to prepare good projects. This is key,” he said.

The finance ministry estimated in a statement full-year growth at around 6.2-6.3%, the country's fastest economic growth rate in 11 years. The economy expanded at 5.5% last year.

The ministry also forecast the rupiah would average 9,170 per dollar in the fourth quarter and 9,125 per dollar for the full year.
At week’s end, Bank Indonesia Deputy Governor Hartadi Sarwono stirred market interest when he said there was room for a rate cut as inflation is expected to ease in November, Dow Jones Newswires reported.

"Historically, (prices) fall after Idul Fitri festivities," Sarwono said in response to a question from a reporter, without giving a specific forecast. Earlier, bank officials had said they remained cautious on the country’s benchmark rate.

The World Bank remained strongly upbeat. "We are projecting 6.3% growth this year and are expecting it to pick up a bit further to 6.4% next year," the bank’s East Asia and Pacific lead economist Milan Brahmbhatt said in Washington via a video linkup Thursday.

Milan said that Indonesia would be able to weather short-term global volatility arising out of the US sub-prime mortgage crisis and the renewed surge in oil prices through increased domestic consumption and investment, which would continue to sustain growth, The Jakarta Post reported.

The Bali conference on climate change next month continued to emerge as a major global event, with plans for a meeting of finance ministers in conjunction with the conference.

Finance Minister Sri Mulyani Indrawati said the ministers will meet on December 10-11 to try to agree on ways to pave the way for developing and developed countries to agree on a "common objective on the financial issues of climate change," the Post reported.

The share market ended down 1.4% on the week as investors took profits after strong rises earlier in the week. The Jakarta Stock Exchange composite index closed at 2,668.70. The rupiah was trading at between 9,320 and 9,325 to the dollar at the end of the week.
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