Indonesia announces $173b budget for 2014

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Jakarta skyline1The Indonesian government unveiled a $173 billion budget draft for 2014 on August 16 that is aimed at boosting a slowing economy before elections in the same year.

Indonesia in the recent past has been experiencing slowing growth, high inflation and a plunge in the value of the rupiah. President Susilo Bambang Yudhoyono cannot stand in 2014 as he is constitutionally barred from running for a third term, he seeks to restore the nation’s financial health, insisting the budget would ensure that “Indonesia will be in a better position to overcome the challenges that may emerge”.

The government would implement a “keep buying strategy” to make sure consumer spending remained strong and invest in various infrastructure projects. Yudhoyono also said the country would “look at new markets” to overcome falling Chinese demand for Indonesian exports such as coal and palm oil.

The budget still needs parliamentary approval.

On August 15, Indonesia’s central bank decided to keep its benchmark interest rate at 6.50 per cent. Before, heavy speculation emerged about whether Bank Indonesia would raise the rate for the third consecutive time in three months as the country is plagued by rising inflation standing at 8.61 per cent year-on-year in July 2013.

Reluctance to raise the interest rate again seems to indicate that the Bank gives priority to economic growth, which has slid to a three-year low at 5.81 per cent in the second quarter of 2013.

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Reading Time: 1 minute

The Indonesian government unveiled a $173 billion budget draft for 2014 on August 16 that is aimed at boosting a slowing economy before elections in the same year.

Reading Time: 1 minute

Jakarta skyline1The Indonesian government unveiled a $173 billion budget draft for 2014 on August 16 that is aimed at boosting a slowing economy before elections in the same year.

Indonesia in the recent past has been experiencing slowing growth, high inflation and a plunge in the value of the rupiah. President Susilo Bambang Yudhoyono cannot stand in 2014 as he is constitutionally barred from running for a third term, he seeks to restore the nation’s financial health, insisting the budget would ensure that “Indonesia will be in a better position to overcome the challenges that may emerge”.

The government would implement a “keep buying strategy” to make sure consumer spending remained strong and invest in various infrastructure projects. Yudhoyono also said the country would “look at new markets” to overcome falling Chinese demand for Indonesian exports such as coal and palm oil.

The budget still needs parliamentary approval.

On August 15, Indonesia’s central bank decided to keep its benchmark interest rate at 6.50 per cent. Before, heavy speculation emerged about whether Bank Indonesia would raise the rate for the third consecutive time in three months as the country is plagued by rising inflation standing at 8.61 per cent year-on-year in July 2013.

Reluctance to raise the interest rate again seems to indicate that the Bank gives priority to economic growth, which has slid to a three-year low at 5.81 per cent in the second quarter of 2013.

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