IMF chief calls on In­done­sia to boost growth rate

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In­ter­na­tional Mone­tary Fund (IMF) Man­ag­ing Di­rec­tor Chris­tine La­garde called on In­done­sia to boost its po­ten­tial growth rate and chan­nel rev­enues to more devel­op­ment spend­ing to help cre­ate jobs for its grow­ing labour force.

Af­ter meet­ing with Pres­i­dent Joko Wi­dodo at the start of a week-long trip to In­done­sia, La­garde praised the coun­try´s eco­nomic man­age­ment and stronger poli­cies. “In­done­sia´s econ­omy con­tin­ues to prove re­silient with a sound eco­nomic per­for­mance and favourable out­look,” she said in a state­ment is­sued af­ter the meet­ing.

But in re­cent years, In­done­sia has strug­gled to get its growth rate to ex­ceed 5 per­cent, well be­low the pace of China and In­dia, amid tepid con­sumer de­mand and for­eign di­rect in­vest­ment.

GDP growth failed to meet the gov­ern­ment´s 5.2 per­cent bud­get tar­get last year and the In­ter­na­tional Mone­tary Fund is fore­cast­ing that In­done­sia, South­east Asia´s largest econ­omy, will grow by 5.3 per­cent in 2018.

La­garde said she and Wi­dodo dis­cussed the im­por­tance of achiev­ing higher po­ten­tial growth to help cre­ate jobs, adding, “This re­quires mo­bi­liz­ing rev­enues to fi­nance devel­op­ment spend­ing and sup­port re­forms in the prod­uct, labour and fi­nan­cial mar­kets. In its re­cent an­nual re­view of In­done­sia´s poli­cies, the gov­ern­ment should fo­cus on fi­nanc­ing in­fra­struc­ture with do­mes­tic rev­enue in or­der to avoid a build-up of ex­ter­nal debt.”

La­garde, whose visit comes two decades af­ter a painful In­ter­na­tional Mone­tary Fund bail-out im­posed harsh aus­ter­ity on In­done­sia, praised the coun­try´s greatly ex­panded health care sys­tem dur­ing a hos­pi­tal visit.

Wi­dodo also took her shop­ping at a crowded Jakarta tex­tiles mar­ket, along with In­done­sian Fi­nance Min­is­ter Sri Mulyani In­drawati. The In­ter­na­tional Mone­tary Fund chief will par­tic­i­pate in an eco­nomic con­fer­ence, fea­tur­ing cen­tral bankers and other of­fi­cials from ASEAN countries, fo­cused on new growth mod­els and ad­just­ing to rapidly chang­ing tech­nolo­gies. The IMF will hold its an­nual meet­ings in Oc­to­ber in Bali, In­done­sia.

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