JAKARTA: Indonesia’s economy is fundamentally strong and growing beyond market expectations, its senior economic minister said on Monday, after the rupiah fell to four-year lows against the dollar last week.
Investors have been selling the rupiah due to a shifting outlook for US monetary policy and investor concerns about the incoming government’s fiscal stance.
“We are still growing above market expectations,” Minister Airlangga Hartarto said at a press conference alongside finance minister Sri Mulyani Indrawati and President-elect Prabowo Subianto’s economic adviser.
Markets have been worried about the budget impact of Subianto’s policies, and the concerns were heightened by a report that the debt-to-GDP ratio would rise to 50% from under 40% currently under the incoming government.
Prabowo’s team has denied the report, and have said he would adhere to Indonesia’s fiscal rules. Airlangga said the cost for Prabowo’s programme to give free meals to school children has been projected at 71 trillion rupiah ($4.32 billion) in next year’s budget.
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Last week, Sri Mulyani said the incumbent government of President Joko Widodo would hold discussions with the incoming administration about keeping the country’s public debt to GDP ratio at a prudent level.
At a policy review last week, the central bank held its key benchmark interest rate steady and said it would fine-tune other tools to stabilise the rupiah , saying it saw the currency on a strengthening trend.
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