Jakarta Firms 99/00 Growth Outlook, Cuts Inflation
7/23/99
*******************************
RELAYED TEXT STARTS HERE:
Title: Jakarta Firms 99/00 Growth Outlook, Cuts Inflation
Source: Reuters Limited
Status: Copyright 1999, contact source for permission to reprint
Date: July 23, 1999
JAKARTA, July 23 (Reuters) - Indonesia on Friday revised key economic
forecasts for 1999/00, painting a more optimistic outlook with firmer
growth and lower inflation.
In its latest letter of intent with the International Monetary Fund,
Jakarta said it now expected GDP to grow between 1.5 percent and 2.5
percent and inflation to fall to 4-5 percent by the end of the fiscal
year to March 31.
It said average year-on-year inflation was predicted at between 10
percent to 12 percent in the fiscal year to March 31.
``Growth prospects are benefiting from improving market sentiment,
higher agricultural incomes, and recovering consumption demand,'' the
letter said.
It said the external current account balance was predicted at $2.5
billion, or 1.5 percent of GDP, while gross official reserves by the
end of the fiscal year were predicted at between $27.5 billion to
$28.5 billion.
``The one-month SBI rate is now about 16 percent, half its level just
two months ago, and we see room to guide interest rates down
cautiously further,'' it said.
``Growth prospects are benefiting from improving market sentiment,
higher agricultural incomes and recovering consumption demand,'' the
government said in the letter.
``Growing confidence is being reflected in the return of some capital
from abroad and recent sharp rises in the stock market.''
But the government said it was considering raising electricity prices
for business and large households to help ailing state power firm PT
PLN.
``A major concern is the precarious position of the state electricity
corporation,'' it said. ``The potential scope for higher electricity
prices for industrial users and large households is under
examination.''
The government said it would rationalise cigarette excises on April
1, 2000. Currently, producers pay different excise rates based on
their output.
As part of its tax reforms, Jakarta also said the maximum export tax
on minerals, timber and rattan would be cut to 15 percent by the end
of 1999.
``In this connection, the decree to raise the forest resources
royalty rate to 10 percent will be issued shortly,'' it said.
In line with its commitment to the IMF to forcee recalcitrant debtors
to pay up, the government said it would publish the names of non-
cooperative debtors by August 31 and they could face bankruptcy
proceedings by the end of September.
The letter of intent is Jakarta's latest regular report to the IMF on
the economic outlook and its progress in implementing IMF-mandated
reforms in return for an international bail-out.