JAKARTA (TheInsiderStories) – Finance Ministry and Bank Indonesia (BI) revised the Rupiah exchange rate in 2019’s State budget to Rp15,000 versus the US Dollar, a spike from initial assumption at 14,400 per US Dollar. Next year, Rupiah is estimated to move in a range of 14,800 to 15,200.
“There’s uncertainty, but it’s going to move to a better direction. So there’s implication to the exchange rate average for calculation base in 2019’s state expenditure revenue in the draft,” he said at the meeting with Budget Committee of the House of Representatives on Monday (15/10).
According to him, the monetary policy improvement in developed countries will be done in stages amid the Federal Reserves rate hike. He also heard that there will be a probability that Euro’s strength will balance US Dollar in the second semester of 2019.
Other than that, he explained, US will also continue to discuss bilateral trade agreement with Canada, Europe, and South Korea. While US-China trade war discussion is predicted to get better.
Internally, Warjiyo said, Indonesia government has done some actions to lower current account deficit and encourage foreign inflow, by implementing B20 and import revenue tax rise. Meanwhile, central bank has increased rate and develop foreign exchange market in Indonesia.
On Sept. 14, the House of Representatives’ Commission-XI, which is in charge of state budget, has approved the macroeconomic assumptions in the 2019 State budget with economic growth being targeted at 5.3 percent and inflation at 3.5 percent.
The House members and the government also agreed to peg the value of Rupiah at Rp14,400 against the US dollar, and the rate of treasury bills at 5.3 percent.
The economic growth target of 5.3 percent in 2019 is lower than 5.4 percent target set in 2018, although the government has stated that the economic growth this year will likely reach only 5.2 percent.
Finance Minister Sri Mulyani Indrawati said the macroeconomic assumptions are realistic. “Despite of the downside risks of import policy, the target of economic growth at 5.3 percent in 2019 is still realistic,” she said.
Admitting that there is potential negative impact from the government’s import control policy, she pointed out that the government will manage the imports in such a way not to negatively impact economic growth while minimizing impact to the increase of current account deficit.
The finance minister also said that the government will also try to find the best way of anticipating the change of consumption preferability among the public who tend to save their funds rather than investing to the real sector. She said that through is policies the government will also encourage investors to invest as they tend to play save during the political year of 2018 and 2019.
Other macroeconomic assumptions approved during the hearing are the unemployment rate which is set at 4.8-5.2 percent, poverty rate at 8.5-9.5 percent, economic inequality at 0.38-0.39 percent, and Human Development Index at 71.98.
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