TIMF Board doing Press Briefing on the Jan 2018 Update of the World Economic Outlook. (Photo: IMF)

JAKARTA (TheInsiderStories) – The International Monetary Fund (IMF) said the Indonesia economic outlook is positive with 5.6 per cent growth will rise gradually over the medium term, led by robust domestic demand according to Fund’s assessment on Article IV Consultation Report for Indonesia 2017.

Somehow, the board mentioned the risks to the outlook remain tilted to the downside, including spikes in global financial volatility, uncertainty around U.S. economic policies, lower growth in China, and geopolitical tensions. Global growth and commodity prices could surprise on the upside. Domestic risks include tax revenue shortfalls and larger fiscal financing needs due to higher interest rates.

The Washington based organization commended the Indonesian authorities to maintain economic performance, including stable economic growth, moderate inflation, and a modest current account deficit, which have contained systemic risks. They noted that the economic outlook is favorable, but encouraged the authorities to stay vigilant against risks, including from volatile capital flows.

The IMF’s executive board urged Indonesian authorities to stay vigilant against risks including from volatile capital flows and said fiscal adjustment in 2018 should be gradual to protect growth and rebuild fiscal buffers.

The IMF directors said they welcomed Indonesia’s progress in boosting infrastructure investment, but stressed that the pace should be aligned with available financing and the economy’s ability to absorb new investment.

“Priority should be given to financing infrastructure with domestic revenue, as well as greater private sector participation, including foreign direct investment,” the IMF board said in its assessment. “This would limit the build-up of corporate external debt and contingent liabilities from state-owned enterprises.”

The IMF board also called for authorities to reduce state control and the role of state-owned enterprises in some sectors of the economy and to improve the level and quality of education spending.

Meanwhile, Bank Indonesia welcomes the assessment that shows Indonesian economy continues to perform well with stable economic growth, maintained macroeconomic condition and contained systemic risk. This statement was delivered by the Governor of Bank Indonesia, Agus D.W. Martowardojo, today (07/02) in Jakarta as a response to the article.