Sri Mulyani: Indonesia’s Financial Health is in Good Shape

Minister of Finance urges the public to be more critical of information and to be positive on bettering the nation

By Christ Ponderosa
Monday, June 11, 2018

“The nation’s financial condition is healthy and in good shape,” said Minister of Finance Sri Mulyani Indrawati in her keynote speech at Katadata’s 6th Anniversary Celebration, “Indonesia’s Transformation Into A Digital Economy Giant,” which was held on May 8.

She addressed what she sees as a widespread misconception that Indonesia was falling deeper into foreign debt, emphasizing that when measured through employment, inflation and growth rates, the country’s economic pillars were solid.

Katadata has expertise in data analysis and business publications in Indonesia and is staffed by experienced Indonesian journalists.

Sri Mulyani began her speech with a brief overview of an optimistic world economic outlook for 2018, which she said was the best since the 2008 global economic crisis. She emphasized that with the recovery of the world economy well underway, the impact on the Indonesian economy was good, and that data showed the country had been experiencing the commodity boom cycle faster than most — within less than 12 months after the global recession — while others were still struggling with the bust of the cycle.

She stressed the importance of realizing that “sometimes, overabundance of data makes the quality of our lives worse, not better,” which she then attributed to her observation that being exposed to inaccurate narratives based on incomplete information made individuals more shallow, not more informed.

The minister attributed the rise in Indonesia’s nominal foreign debt to the increase in infrastructure spending. Despite the seemingly rising foreign debt, the rate has been constant at slightly over 1 percent of the nation’s GDP for the last 10 years. With such a rate, Indonesia is actually among the countries with the lowest debt-GDP ratio, compared to other emerging markets in the world.

She cautioned the public against believing everything they hear about this issue, and encouraged them to be more critical, as alternative narratives are created and fed to the public for political purposes at the expense of what the complete data actually says.

She said the country’s current account deficit has not exceeded 2 percent, and the fiscal deficit was 2.19 percent. These rates, combined with strong macroeconomic fundamentals — low inflation at 3.5 percent, high 5 percent growth given the level of domestic demand and supply, strong investment into the country and positive exports — show a healthy economy.

Sri Mulyani said that President Joko Widodo was very focused on guarding the Indonesian economy, and that as a representative of the people, he was not easy to satisfy, and this was why the public should not be worried that his administration would implement policies that were not in the public interest and that would stifle growth.

She said the government’s intention is to ensure that the middle and lower classes feel supported through the development of a vibrant small and medium-sized enterprise (SME) sector, which she believes is important to give the economy a greater capacity to absorb global shocks. She also said the government was focused on addressing issues through greater interagency coordination, and that all of the administration’s policies were meant to build resilience.  

With political competition underway on many platforms, Sri Mulyani asked the audience to use their power to influence others for the betterment of the nation.

“You can’t wait for the president. This is about you and how you influence others. You are all influencers,” she said.

In the face of the information war, the finance minister also urged netizens to channel their energy toward doing more positive things online, such as discovering problems with current systems and solving fundamental issues, instead of spreading misinformation, intentionally or unintentionally.

Sri Mulyani concluded by encouraging Katadata to contribute more to educating the public on how the policies implemented by the government are good for Indonesia.

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