ProdukHukum BankIndonesia
REPUBLIC OF INDONESIA
Recent Economic Developments
September, 2010
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Published by Investors Relations Unit –Republic of Indonesia Address Bank Indonesia
International Directorate Investor Relations Unit
Sjafruddin Prawiranegara Building, 5thfloor
Jalan M.H. Thamrin 2 Jakarta, 10110 Indonesia Tel +6221 381 8316
+6221 381 8319 +6221 381 8298 Facsimile +6221 350 1950
E-mail Elsya Chani: [email protected] Firman Darwis: [email protected] Dyah Miranti Wulandari: [email protected] Website www.bi.go.id/iru
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Republic of Indonesia: Impressive Economic Performance
1. High Economic Growth
2. Macroeconomic Stability
3. Prudent Fiscal Policy
4. Improved International Perception
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Executive Summary: High Economic Growth
The economy grew by 6.2% in Q2-2010. It was forecasted to grow within the range of 5.5%-6.0% by the end of 2010, and estimated to reach the upper limit projection, with increasing contribution from investment, and consumer spending.
GDP Growth in Second Quarter of 2010 compared with Quarter-I-2010 (q-to-q) equal to 2.8%, supported by household consumption, government consumption and exports of goods and services.
The cumulative investment realization for the first semester of 2010 is Rp. 92.9 trillion. In comparison with the figure in first semester of 2009, which is Rp. 66.4 trillion, the investment realization grew by 39.9%.
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Executive Summary: Contained Macroeconomic Stability
The latest Board of the Governors Meeting of Bank Indonesia convened in September 2010 resolved to hold the policy rate, BI Rate at 6.5%.
August 2010 reached CPI inflation at 0.76% (mtm) or 6.44% (yoy).Inflationary pressure was driven mainly by higher inflation in the foodstuffs category and particularly rice, due to seasonal uncertainties. In contrast, pressure from core inflation has been kept at modest levels as a result of adequate supply-side response to increases in demand and the appreciating trend in the exchange rate.
Banking performance remain positive.Banks continue to maintain relatively strong CAR with improvements in asset quality.
Balance of payments on Q2-2010 has posted a significant surplus of US$5.4 billion.The surplus was contributed from both the current account and capital and financial account. The current account posted a US$1.8 billion surplus, bolstered from upbeat performance in non-oil/gas trade balance, the gas trade balance and the current transfers balance. The ongoing world economic recovery has strengthened non-oil/gas exports with growth outperforming non-oil/gas imports. The capital and financial account recorded a US$3.3 billion surplus distributed fairly among all major components.
By end of Q2-2010, the foreign exchange reserves had increased to USD76.3 billion. The reserves continued to increase to reach USD81.3 billion on 31 August 2010,equivalent to 6.1 months of imports and servicing of official external debt.
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Executive Summary: Prudent Fiscal Policy
•
Deficit budget is reduced to 1.6% of GDP in 2010•
Target to reduce debt GDP ratio to 27% by end of 2010(7)
Executive Summary: Improved International Perception
Resilient economy, which impressively navigates through the global crisis and with growing confidence in economic outlook, the Republic continued to receive good reviews, especially from Rating agencies
Japan Credit Rating Agency, Ltd (July 13, 2010): upgraded Indonesia's sovereign rating to Investment Grade from BB+ to BBB- with stable outlook.The first upgrade to reach investment grade in the last 13 years reflects enhanced political and social stability, sustainable economic growth , alleviated public debt burden as a result of prudent fiscal management, reinforced resilience to external shocks stemming from the foreign reserves accumulation and an improved capacity for external debt management and efforts made by the current administration to outline the framework to deal with structural issues such as infrastructure development.
Moody’s Investors Service (June 21, 2010): revised the outlook of Indonesia’s foreign and local-currency Ba2 sovereign debt ratings to positive from stable. The positive outlook broadly reflects the country's capacity for sustained strong growth, the overall stability and effectiveness of its fiscal and monetary policies, and expectations of further improvements in the government's financial and debt position.
The IMD Competitive Center (May 19, 2010) reports a major improvement in Indonesia's global competitiveness, with Indonesia moving up from 42nd to 35nd place among a total of 57 major nations surveyed worldwide. For Indonesia, the improvement in 2010 has been achieved through significant gains in economic performance, followed by government efficiency and infrastructure improvement.
OECD (April 2, 2010):upgraded Indonesia’s Credit Risk Classification (CRC) from category 5 to 4. This upgrade was a timely acknowledgement by the developed economies of the consistent economic improvement. This upgrade would significantly improve
Indonesia’s credit standing in front of the creditor countries especially the credit exports creditor countries which eventually would
decrease the debt burden.
S & P (March 12, 2010): upgraded Indonesia’s long-term foreign currency rating to BB from BB- with positive outlook
which indicates that Indonesia has big possibility to be upgraded within a year, even maybe faster. The main factor supporting this decision is steadily improving debt metrics and growing foreign currency reserves which reduced vulnerability to shock with continued cautious fiscal management.
Fitch Ratings (January 25, 2010): upgraded the Republic of Indonesia’s sovereign rating to ‘BB+’from ‘BB’ with stable outlook The rating action reflects Indonesia’s relative resilience to the severe global financial stress test of 2008-2009 which has been underpinned by continued improvements in thecountry’spublic finances.
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Indonesia Development Policy is based on a
‘Triple
Track
Strategy’
1st
Pro-Growth:
Increase Growth by prioritizing export and investment
2nd
Pro-Job :
Boost up the real sector in order to create jobs
3rd
Pro-Poor:
Revitalize agriculture, forestry, maritime, and rural economy
to reduce poverty
Real Sector: Indonesia Development Policy
Source: Coordinating Ministry for Economic Affairs 9
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In 2010, the Indonesian economy is positioned to grow higher
GDP Growth
is forecasted to be at the upper limit of
5.5%-6.0% projection
With more upbeat confidence to the economy, exports and investment are expected to keep climbing, providing additional boost to higher consumption in support of higher levels of economic growth.
2010 Forecast Main Factors Behind The Forecast
Source: Bank Indonesia.
Inflation
is estimated to be on the upper limit of
target range of 5.0% 1%
Signs of future inflationary pressures until end of 2010 are noted, which mainly predicted from administered prices and volatile food seasonal uncertainties. However, BI is positive to contain the inflation level within the target range, and will keep a close watch on the rising inflationary pressure and make the necessary adjustments to monetary policy responses to ensure that inflation remains on track with the established targeting range at 5% 1% in 2010 and 2011.
Export
is expected to chart higher growth
Global economic recovery will produce renewed acceleration in exports. The global economy is predicted to enter
an expansionary phase in 2010. Renewed momentum is predicted in the economies of Indonesia’s major trading partners. The recovery will induce higher volume of international trade which will accelerate Indonesia’s export. This
strengthened performance will position exports as one of the main engines of economic growth in 2010.
Indonesian exports characteristics which is based on primary commodities has also supported export growth acceleration.
Private
Consumption
will remain strong
Household consumption is forecasted to remain strong. The strengthening global economic outlook for 2010 will
given added momentum to Indonesia’s exports, which in turn will produce an overall increase in private incomes.
Higher investment will also contribute to rising incomes, thus paving the way for stronger public purchasing power. 10
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Impressively High Economic Growth
(*): Preliminary
Source: Ministry of Finance, BPS.
The Indonesian economy grew by 6.2% in Q2-2010 amid persistent risks of global uncertainties, particularly in regard to the slowdown in China's economy and the outlook for US economic recovery.The major improvement was a result from increase in exports and
investment, while private consumption remained strong.
Economic data up to end of Q2-2010 supported us to believe that the economy, in line with the development in the global economy, is moving toward better development. The optimism also supported by latest development in the perception indicators such as yield sprea d, sovereign rating, CDS, CRC-OECD, etc. On the backdrops, Bank Indonesia believe that the economy will grow at the upper range of 5.5-6.0% in 2010 and within the range of 6.0-6.5% in 2011.
Higher economic growth during 2nd quarter of 2010 was driven mainly by exports and household consumption. Household consumpti on moved inline with stronger domestic demand and improving consumer confidence. The continous global economic recovery preserves the growth of export and import. Higher domestic demand and export, improvement of domestic investment climate and also government projects initiation
induced higher investment and imports. The improvement of domestic demand is consistent with bank’s increasing intermediary activity and also the increasing business confidence.
Optimistic on growth prospects, it is quite strong compared globally
Source: Bank Indonesia.
Sustainable Economic Growth
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
2006 2007 2008 2009 2010-Q2
5. 5
6. 3
6. 0
4. 5
6. 2 % yoy
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Stable rupiah is expected to damp pressure from higher commodity prices and pave the way for betterinflation expectation. From domestic side, in addition to administered price, subtle inflationary pressure would also be the result from higher demand along with higher economic growth as production capacity remain adequate to respond to higher demand.
Renewed inflationary pressure are already noted, which in August resulted in 0.76% (mtm) CPI inflation, representing an annual rate of increase in the CPI at 6.44% (yoy). Alongside this, core inflation in August 2010 came to 4.53% (yoy). Inflation in volatile foods remains strong despite easing slightly from the preceding month, while inflation in administered prices continues at a brisk pace due to a rise in electricity billing rates.
Future inflationary pressure until end of 2010 is predicted to come mainly from higher electricity tariff, upcoming Ramadhan festivities and higher food prices associated with seasonal uncertainties.
Going forward in 2011, apart from uncertainties in food prices, inflationary pressures could also be spurred, partly, by an increasing demand. BI will keep a close watch on the rising inflationary pressure and make the necessary adjustments to monetary policy responses to ensure that inflation remains on track with the established targeting range at 5% 1% in 2010 and 2011.
Inflation: Noted Pressure But Core Is Stable
Source: Bank Indonesia
Inflation Inflation Expectation –Consensus Forecast
The monetary policy stance is directed towards maintaining consistently low inflation while making adequate provision for measures to strengthen economic recovery.
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Source: Bank Indonesia
Balance of Payments Q2-2010
Balance of Payments
20,000 30,000 40,000 50,000 60,000 70,000 80,000 -6,000 -4,000 -2,000 0 2,000 4,000 6,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3* Q4* Q1* Q2*
2007 2008 2009 2010
Indonesia's BOP
Current Acc. Cap. & Fin. Acc Reserve Assets (RHS)
Million USD Million USD
Indonesia's Q2/2010 balance of payments posted a significant surplus at US$5.4 billion. Key to this surplus were positive
contributions from the current account and the capital and financial account.
The current account in Q2/2010 posted a surplus of about US$1.8 billion. Bolstering this surplus was upbeat performance in
non-oil/gas trade balance, the gas trade balance and the current transfers.
The capital and financial account in Q2/2010 recorded a surplus at US$3.3 billion. All major components of the capital and
financial account, encompassing direct investment, portfolio investment and other investment, recorded surplus.
In response, international reserves at end-Q2/2010 mounted to US$76.3 billion, equivalent to 5.8 months of imports and servicing of official external debt. The reserves continued to increase to reach USD81.3 billion on 31 August 2010, equivalent to 6.1 months of imports and servicing of official external debt.
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Balance of Payments Q2
–
2010
The current account in Q2/2010 posted a surplus of
about US$1.8 billion, boosted by upbeat performance in
non-oil/gas trade balance, the gas trade balance and the current transfers. The surplus was nevertheless down from the previous quarter (US$2.1 billion surplus) due to the increased deficit in the oil trade balance and the income account.
The capital and financial account in Q2/2010 recorded
a surplus at US$3.3 billion. All major components of the
capital and financial account, encompassing direct investment, portfolio investment and other investment, recorded surplus. Despite this, the overall capital and financial account surplus was down from the preceding quarter (US$4.3 billion surplus), mainly as a result of negative spillover effects from the debt crisis in Europe that have led to reduced inflows of portfolio investment.
Source: Bank Indonesia
Q1 Q2 Q3* Q4* Total Q1* Q2* I. CURRENT ACCOUNT 126 2,508 2,480 2,157 3,602 10,746 2,068 1,834
A. Goods, net 22,916 6,884 8,365 8,488 11,395 35,133 8,418 8,985
1. Non-Oil & Gas, net 15,130 5,335 6,436 6,647 8,388 26,806 6,460 7,037 2. Oil & Gas, net 7,786 1,549 1,928 1,842 3,007 8,326 1,958 1,948
B. Services, net -12,998 -2,743 -3,310 -3,509 -4,546 -14,108 -3,595 -3,697 C. Income, net -15,155 -2,742 -3,776 -4,072 -4,551 -15,140 -3,922 -4,642 D. Current Transfers, net 5,364 1,109 1,201 1,248 1,303 4,861 1,168 1,188 II. CAPITAL & FINANCIAL ACCOUNT -1,832 1,593 -1,822 2,507 1,270 3,548 4,274 3,334 A. Capital Account 294 19 29 34 14 96 18 0 B. Financial Account -2,126 1,574 -1,851 2,474 1,255 3,453 4,256 3,334 1. Direct Investment 3,419 453 400 472 604 1,928 1,745 1,171
a. Abroad -5,900 -1,451 -1,047 -515 64 -2,949 -627 -1,328 b. in Indonesia 9,318 1,904 1,447 987 540 4,877 2,372 2,499
2. Portfolio Investment 1,764 1,950 1,893 2,972 3,521 10,336 6,159 1,142
a. Assets -1,294 133 362 -331 -307 -144 -409 -99 b. Liabilities 3,059 1,817 1,532 3,303 3,828 10,480 6,569 1,241
3. Other Investment -7,309 -829 -4,144 -970 -2,869 -8,812 -3,648 1,021
a. Assets -10,755 -307 -2,271 -6,325 -3,702 -12,605 -4,080 1,388 b. Liabilities 3,446 -522 -1,873 5,355 833 3,793 432 -367
III. TOTAL (I+II) -1,706 4,101 658 4,664 4,872 14,294 6,342 5,168 IV. NET ERRORS & OMISSIONS -239 -146 394 -1,118 -918 -1,788 279 253 V. OVERALL BALANCE (III+IV) -1,945 3,955 1,052 3,546 3,954 12,506 6,621 5,421
*)
: provisional figures
2010
(million US$)
Indonesia's Balance of Payments
ITEMS 2008 2009
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Sound Banking Sector
Protected by prudential guidelines and conservative practices, the Banking Sector has weathered the global financial turmoil and posted good performance : strong solvency, contained risk exposure and profitability
Financial system stability up to August 2010 is well maintained, confirmed by Financial Stability Index (FSI) which remain unchanged at 1.84 (June 2010 also at 1.84). The level of FSI maintained indicates low pressure to the financial system which is mainly supported by lower credit risk and lower volatility in the financial market.
Banking industry remains in a stable condition and convinced to be run prudently, which is reflected in the well-maintained Capital Adequacy Ratio (16.55%, as of end of July 2010) and safe level of gross Non-Performing Loans (without chanelling) at 3%, as of end of July 2010.
Intermediary function is significantly improving reflected by 20.29% (yoy) credit expansion recorded in end of August 2010.Sufficient CAR (%) Sound level of NPLs (%)
Source: Bank Indonesia. 16
-5.0 10.0 15.0 20.0 25.0
Dec-06 Dec-07 Dec-08 Dec-09 Jan-10 Mar-10 May-10 Jul-10
-1.0 2.0 3.0 4.0 5.0 6.0 7.0
Dec-06 Dec-07 Dec-08 Dec-09 Jan-10 Mar-10 May-10 Jul-10
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Banking system stability held firm amid the onset of renewed credit expansion (data as of July 2010)
Main Banking Indicators
Source: Bank Indonesia * Preliminary figures, operational risk is calculated in July 2010 figures
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Monetary Policy Stance
BI Rate
In the Board of the Governors' Meeting convened on 3 September 2010, Bank Indonesia decided to hold the BI Rate at 6.5%. However, in view of the potential for future inflationary pressure and the considerable excess liquidity in the banking system, the Board of Governors is stressing the importance of raising the Primary Statutory Reserve Requirement from 5% to 8% of bank's third party rupiah deposits. Similarly, to promote the banking intermediation function, the Board of Governors has also imposed a statutory reserve requirement based on the LDR (loan to deposit ratio) as a means of ensuring credit growth firmly based on prudential banking principles.
This decision is based on the present developments in the Indonesian economy, marked by a more vigorous upward trend on the demand side compared to supply side response.The robust pace of domestic demand is being driven primarily by household consumption while investment has begun to climb, but has not provided optimum support for supply side improvement.
Source: Bank Indonesia.
6.5 6.14 5.5 6 6.5 7 7.5 8 8.5 9 9.5 10 Ja n-09 Fe b-09 M ar -09 Ap r-09 M ay -09 Ju n-09 Ju l-09 Au g-09 Se p-09 Oc t-09 No v-09 De c-09 Ja n-10 Fe b-10 M ar -10 Ap r-10 M ay -10 Ju n-10 Ju l-10
BI Rate rPUAB O/N (average)
%
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Overview of Fiscal Policy for 2009 and 2010
Reduce debt to GDP ratio: 2009 (28%), 2010 (27%).
Actual fiscal deficit 1.6% of GDP, lower than 2.4% of GDP target deficit projected in 2009 Revised Budget
Target fiscal deficit 1.6% of GDP in 2010 BudgetFiscal Stimulus Policies
Tax and
Administrative Reforms
New Feature of Fiscal Policy
Maintain
Social Welfare
Continue welfare programs (PNPM, BOS, Jamkesmas, Raskin) and provide budget for educationsector
Continue tax policy and administration reform, reduce rate for companies, certainty of tax policy for oil companies
Implement the 1st batch of Performance Based Budget (PBB), Civil Service Reform and Remuneration (11 ministries) and multi-years projects
Sufficient fiscal risk for oil and commodity prices, El-Nino, provide guarantee on land acquisition for infrastructure projects, secure financing for power (PLN) and restructuring water services (PDAM), domestic oil price adjustment if necessary
Export promotion (additional capital for Indonesian Exim Bank) and incentives for real sector, climate change projects (geothermal, bio-premium, green funds)Source: Ministry of Finance 20
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Fiscal Policy to Promote Economic Recovery
Provide incentive for geothermal energy through income tax and VAT
Provide tax incentive on imports (both income tax and VAT on imports) for the oil and gas exploration sector
Provide incentive for green energy through for VAT and subsidyEnergy Incentives
Provide custom incentives for select industries
Provide custom incentives for imported capital goods and capexIncentives for Industry
Reduce income tax rate for corporations from 28% to 25%
Reduce income tax rate by 5% for listed companies with 40% public ownership
Provide income tax facilities for businesses in specific industries or areas
Free VAT for primary agriculture products
Eliminate many luxury tax items
Provide tax and custom Incentive for special areas in accordance with law on tax and custom
Eliminate non tax revenue for export and import documentationIncentives on General
Taxation
The fiscal policy aims to promote economic recovery by providing tax incentives to various sectors and businesses which further promotes private consumption and investment spending
Source: Ministry of Finance 21
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Fiscal Policy to Enhance Competitiveness
Guarantee for 10,000 MW electricity program and IPP
Additional funds for land clearing for toll road building
Guarantee obligation for State Water Company and subsidy on interest for clean water, and interest credit for State Water Company, business in Aceh / Nias, and KKPE
Subsidy and VAT for people’s housing (low income housing)
The Indonesian government continues to support the development of infrastructure and enhance the social welfare through the effective fiscal policy and incentives for specific sectors
Infrastructure Development and Social Welfare
Assistance to Support
Specific Sectors
Credit for green fuel development
Credit for farming and cow growers
Subsidy for fertilizers, seeds and inventory
Direct assistance for seeds at competitive pricing in order to revitalize plantation, cocoa and sugar industry
Additional capital for LPEI (Indonesian Exim Bank) to finance export related activities, including for SMEs
Provide incentives for high performance regions (e.g. performance on financial, economics and social welfare)
Resolution for troubled asset at SOEs and SMEs loan
Source: Ministry of Finance 22
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Budget Deficit / GDP
Public Finances is a fundamental strength of the Indonesian economy; most of Indonesian ratios are strong or
stronger than its peers; Fiscal Budget deficit has traditionally been limited and remained contained in 2009. Fiscal Stimulus did not impact much on fiscal deficit in 2009
Budget Deficit / GDP (%) Budget Deficit / GDP 2009* vs. Emerging Markets Countries
Source: Ministry of Finance 23
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Financing Trend 2005-2010
Source: Ministry of Finance
Budget Deficit Financing
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Debt to GDP Ratio (% of GDP) Debt Composition
Debt Figure, 2004 - 2010
Source: Ministry of Finance
Table of Debt to GDP Ratio
2004 2005 2006 2007 2008* 2009** June 10***
GDP 2,295,826.20 2,774,281.00 3,339,480.00 3,949,321.40 4,954,028.90 5,613,441.74 6,253,789.50
Debt Outstanding (billion IDR) 1,299,504.02 1,313,294.73 1,302,158.97 1,389,415.00 1,636,740.72 1,590,656.07 1,612,848.64
- Domestic Debt (Securities) 653,032.15 658,670.86 693,117.95 737,125.54 783,855.10 836,308.91 879,349.31
- Foreign Debt (Loan+Securities) 646,471.87 654,623.87 609,041.02 652,289.46 852,885.62 754,347.16 733,499.32
Debt to GDP Ratio 56.60% 47.34% 38.99% 35.18% 33.04% 28.34% 25.79%
- Domestic Debt to GDP Ratio 28.44% 23.74% 20.76% 18.66% 15.82% 14.90% 14.06%
- Foreign Debt to GDP Ratio 28.16% 23.60% 18.24% 16.52% 17.22% 13.44% 11.73%
End of Year
Notes:
* = Preliminary ** = Very Preliminary
*** = Very Very Preliminary, GDP number based on Budget 2010 Assumption
[Outstanding as of June, 2010]
57% 47% 39% 35% 33% 28% 26%
2004 2005 2006 2007 2008* 2009** June 10***
Notes:
* = Preliminary ** = Very Preliminary
*** = Very Very Preliminary, GDP Number Based on Revised Budget 2010 Assumption
50% 50% 53% 53% 48% 53% 55%
50% 50% 47% 47% 52% 47% 45%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2004 2005* 2006** 2007*** 2008+ 2009++ June 10*** Domestic Debt External Debt
Notes:
^ = Based on debt outstanding as of June 2010
(1)
Overview of Fiscal Policy for 2009 and 2010
Reduce debt to GDP ratio: 2009 (28%), 2010 (27%).
Actual fiscal deficit 1.6% of GDP, lower than 2.4% of GDP target deficit projected in 2009 Revised Budget
Target fiscal deficit 1.6% of GDP in 2010 BudgetFiscal
Stimulus
Policies
Tax and
Administrative
Reforms
New Feature of
Fiscal Policy
Maintain
Social Welfare
Continue welfare programs (PNPM, BOS, Jamkesmas, Raskin) and provide budget for education
Continue tax policy and administration reform, reduce rate for companies, certainty of tax policy for oilcompanies
Implement the 1st batch of Performance Based Budget (PBB), Civil Service Reform and Remuneration (11 ministries) and multi-years projects
Sufficient fiscal risk for oil and commodity prices, El-Nino, provide guarantee on land acquisition for infrastructure projects, secure financing for power (PLN) and restructuring water services (PDAM), domestic oil price adjustment if necessary
Export promotion (additional capital for Indonesian Exim Bank) and incentives for real sector, climate change projects (geothermal, bio-premium, green funds)(2)
Fiscal Policy to Promote Economic Recovery
Provide incentive for geothermal energy through income tax and VAT
Provide tax incentive on imports (both income tax and VAT on imports) for the oil and gas exploration sector
Provide incentive for green energy through for VAT and subsidyEnergy
Incentives
Provide custom incentives for select industries
Provide custom incentives for imported capital goods and capexIncentives for
Industry
Reduce income tax rate for corporations from 28% to 25%
Reduce income tax rate by 5% for listed companies with 40% public ownership
Provide income tax facilities for businesses in specific industries or areas
Free VAT for primary agriculture products
Eliminate many luxury tax items
Provide tax and custom Incentive for special areas in accordance with law on tax and custom
Eliminate non tax revenue for export and import documentationIncentives on
General
Taxation
The fiscal policy aims to promote economic recovery by providing tax incentives to various sectors and
businesses which further promotes private consumption and investment spending
(3)
Fiscal Policy to Enhance Competitiveness
Guarantee for 10,000 MW electricity program and IPP
Additional funds for land clearing for toll road building
Guarantee obligation for State Water Company and subsidy on interest for clean water, and interest credit for State Water Company, business in Aceh / Nias, and KKPE
Subsidy and VAT for people’s housing (low income housing)
The Indonesian government continues to support the development of infrastructure and enhance the social
welfare through the effective fiscal policy and incentives for specific sectors
Infrastructure
Development
and Social
Welfare
Assistance to
Support
Specific
Sectors
Credit for green fuel development
Credit for farming and cow growers
Subsidy for fertilizers, seeds and inventory
Direct assistance for seeds at competitive pricing in order to revitalize plantation, cocoa and sugar industry
Additional capital for LPEI (Indonesian Exim Bank) to finance export related activities, including for SMEs
Provide incentives for high performance regions (e.g. performance on financial, economics and social welfare)
Resolution for troubled asset at SOEs and SMEs loan
(4)
Budget Deficit / GDP
Public Finances is a fundamental strength of the Indonesian economy
; most of Indonesian ratios are strong or
stronger than its peers; Fiscal Budget deficit has traditionally been limited and remained contained in 2009. Fiscal Stimulus
did not impact much on fiscal deficit in 2009
Budget Deficit / GDP (%) Budget Deficit / GDP 2009* vs. Emerging Markets Countries
(5)
Financing Trend 2005-2010
Budget Deficit Financing
(6)
Debt to GDP Ratio (% of GDP) Debt Composition
Debt Figure, 2004 - 2010
Table of Debt to GDP Ratio
2004 2005 2006 2007 2008* 2009** June 10***
GDP 2,295,826.20 2,774,281.00 3,339,480.00 3,949,321.40 4,954,028.90 5,613,441.74 6,253,789.50
Debt Outstanding (billion IDR) 1,299,504.02 1,313,294.73 1,302,158.97 1,389,415.00 1,636,740.72 1,590,656.07 1,612,848.64
- Domestic Debt (Securities) 653,032.15 658,670.86 693,117.95 737,125.54 783,855.10 836,308.91 879,349.31 - Foreign Debt (Loan+Securities) 646,471.87 654,623.87 609,041.02 652,289.46 852,885.62 754,347.16 733,499.32
Debt to GDP Ratio 56.60% 47.34% 38.99% 35.18% 33.04% 28.34% 25.79%
- Domestic Debt to GDP Ratio 28.44% 23.74% 20.76% 18.66% 15.82% 14.90% 14.06%
End of Year
57% 47% 39% 35% 33% 28% 26%
2004 2005 2006 2007 2008* 2009** June 10***
Notes:
* = Preliminary ** = Very Preliminary
*** = Very Very Preliminary, GDP Number Based on Revised Budget 2010 Assumption
50% 50% 53% 53% 48% 53% 55%
50% 50% 47% 47% 52% 47% 45%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2004 2005* 2006** 2007*** 2008+ 2009++ June 10*** Domestic Debt External Debt
Notes:
^ = Based on debt outstanding as of June 2010