Indonesia fin min says state budget can weather rupiah's fall

Posted by On 4:18 AM

Indonesia fin min says state budget can weather rupiah's fall

Reuters

JAKARTA, Sept 10 (Reuters) - Indonesia's finance minister said on Monday that a slump in the rupiah currency would be a net benefit for government income this year, seeking to reassure parliament that the country's budget would not be thrown out by an emerging market rout.

The rupiah has slid 9 percent against the dollar so far this year and is trading at its weakest levels since the Asian financial crisis in 1998.

The 2018 budget assumed the rupiah exchange rate would average 13,400 a dollar. The rupiah was down 0.4 percent on Monday at 14,870.

"But managing the state budget is not about profits or losses. If the budget is healthy, we can use it as an instrument to manage the economy better," Indrawati said during a hearing for the 2019 budget proposal.

Indrawati said growth in total government income as of August was "quite high and consistent", with a 15 percent rise in tax revenue being the highest in the past three years.

Last month, President Joko Widodo presented a proposal for the 2019 state budget with a fiscal deficit of 1.9 percent of gross domestic product, below this year's estimate of 2.1 percent.

"Now that yields are higher, we must be more careful and that's why we designed a smaller fiscal deficit at a time of rising debt servicing costs. We consolidate a stronger fiscal policy," she said.

The focus for policymakers next year is still stability, Indrawati said, predicting more risks to global economic growth coming from higher interest rates in advanced economies and the U.S.-China trade war.

< p>The benchmark 10-year bond yield rose to 8.583 percent on Thursday, the highest since January 2016, before starting to fall. On Monday, the yield was at 8.444 percent.

($1 = 14,870.0000 rupiah)


This article appears in: Politics , Fundamental Analysis , Stocks , World Markets , Economy , BondsSource: Google News Indo nesia | Netizen 24 Indonesia

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