Indonesia

World Bank

Indonesia

Autores

World Bank

Editor

Washington, DC

Descripción

This October 2005 edition of the Indonesia economic and social update reports that the government moved to address ballooning fuel subsidies and exchange rate instability with a bold policy package. The report emphasizes the importance of a good macroeconomic policy, investment climate reforms, and effective expenditure management in Indonesia, comprising a continued focus on reducing the government debt burden (as measured by a trend decline in debt to GDP), and depoliticizing domestic fuel prices by linking them to international prices and monetary policy designed to bring inflation in line with regional averages. It also urged that a clear articulation and coordination of policy announcements be a priority. Improvements to the investment climate would be led by reversing the slide in oil and gas exploration and production, concrete measures to address investor concerns including the time and expense to register a company and redressing cumbersome tax administration procedures. A quick clearance of an investment bill that dramatically reduced red tape would send out a strong, highly visible signal to investors. However, the report notes that Indonesia's key challenge may lie in the allocation and management of public expenditures. The government's reduction of untargeted fuel subsidies and their reallocation to capital and social spending represent an unprecedented opportunity to improve the level and quality of growth in the medium term. The government will need to build on budget reforms to improve the link between government priorities (accelerating infrastructure and reducing poverty, for example), improving the efficiency of budget procedures, and reducing leakages.

Palabras clave

ACCOUNTABILITY, AGRICULTURE, BALANCE OF PAYMENTS, BANK INDONESIA, BANK LOANS, BANKING SECTOR, BANKING SYSTEM, BANKS, BARREL, BASE YEAR, BUDGET SURPLUS, CAPITAL ADEQUACY, CAPITAL BASE, CAPITAL EXPENDITURES, CENTRAL BANK, COMPETITIVENESS, CONSOLIDATION, CONSUMER PRICE INDEX, CRUDE OIL, CRUDE OIL PRICE, CRUDE OIL PRICES, DEBT, DECENTRALIZATION, DEPOSIT INSURANCE, DEPOSITS, DEPRECIATION, DOMESTIC DEBT, ECONOMIC GROWTH, EMPLOYMENT, EQUITY MARKETS, EXCHANGE RATES, EXPORT GROWTH, EXPORTS, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL RATIOS, FINANCING SOURCES, FISCAL POLICY, FIXED CAPITAL, FOREIGN CURRENCY, FOREIGN EXCHANGE, FOREIGN INVESTMENT, FUEL, FUEL CONSUMPTION, FUEL PRICE, FUEL PRICES, GAS EXPLORATION, GAS EXPLORATION AND PRODUCTION, GAS PRICES, GAS SECTORS, GDP, GDP DEFLATOR, GOVERNMENT BONDS, GOVERNMENT REGULATION, GROSS FIXED CAPITAL FORMATION, GROWTH RATE, HIGHER OIL PRICES, HOUSING, INCOME TAX, INFLATION, INFLATION RATE, INTEREST MARGIN, INTEREST RATE, INTEREST RATES, INTERNATIONAL OIL PRICES, INTERNATIONAL RESERVES, INTERNATIONAL TRADE, INVESTMENT CLIMATE, INVESTMENT GROWTH, KEROSENE, LAWS, LIQUIDITY, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, M1, M2, M3, MACROECONOMIC MANAGEMENT, MACROECONOMIC POLICY, MONETARY AGGREGATES, MONETARY POLICY, MONEY SUPPLY, MORTGAGE LOANS, NET INTEREST MARGIN, NOMINAL VALUE, OIL, OIL AND GAS, OIL AND GAS SECTOR, OIL IMPORTS, OIL PRICE, OIL PRODUCTION, PORTFOLIO, PORTFOLIO INVESTMENT, PRICE INCREASES, PRIVATE CAPITAL, PRIVATIZATION, PROFITABILITY, PROPERTY TAXES, PUBLIC EXPENDITURES, REAL GDP, REAL INTEREST RATES, REFINERY, RETURN ON EQUITY, RISK PREMIUM, ROA, ROE, STATE BANKS, TAX ADMINISTRATION, TAX LAWS, TAX RATES, TAX REVENUES, TRADE BALANCE, TRANSPARENCY, TRANSPORT, TREASURY BILL, UNEMPLOYMENT, UNEMPLOYMENT RATE, WORKING CAPITAL, YIELD SPREAD