Indonesia Not in Crisis: Finance Minister

Fundamental indicators, such as inflation, economic growth and trade balance still better than those recorded in 1998

Jakarta Globe
Tuesday, August 25, 2015

Indonesia's economy remains robust enough to weather a weakening rupiah and capital outflow, ‎Finance Minister‎ Bambang Brodjonegoro said Tuesday in the latest government salvo to calm markets.

"We're not in crisis. Everything is still under control and different from the conditions preceding the 1998 crisis," Bambang said after a plenary session ‎in the House of Representatives on Tuesday.

He added that the country's fundamental indicators, such as inflation, economic growth and trade balance, were still better than those recorded in 1998.

The country's inflation in 1998 was far higher from Indonesia's current 2 percent year-to-date inflation.

"Our economy shrank by 14 percent at the time. By contrast, we still have positive growth of 4.7 percent in the first half of 2015," Bambang said.

Indonesia posted a $1.33 billion trade surplus in July, doubled the revised $530 million trade surplus in June.

Bambang said the country's banking sector remained sound, with non-performing loans at around 2.6 percent and capital adequacy ratio at 20 percent. Bank Indonesia (BI) requires NPL to be below 3 percent and CAR at a minimum of 8 percent.

Maruarar Sirait, a lawmaker from President Joko Widodo's Indonesia Democratic of Struggle (PDI-P) party, echoed the minister's sentiments.

"I dare say that things are pretty rough [for Indonesia] right now, but this is not a crisis because we know our foreign exchange reserve is adequate," Maruarar said.

"We know because we've had a meeting with the central bank. We also know that our government has maintained synergy with the financial regulators."

However, BI data showed that Indonesia's forex had decreased to $107.55 billion last month, from $108.02 billion at the end of June.

This article first appeared on the Jakarta Globe website.

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