Jakarta, 17 Ramadhan 1436/4 July 2015 (MINA) – Indonesia will not suffer the same fate as Greece, which is in a state of default after failing to pay its debts to institutions such as the International Monetary Fund, a Finance Ministry official said.
“Indonesia will not go bankrupt like Greece,” Special Staff of the Finance Minister Arif Budimanta affirmed during a discussion organized by the Public Relations Division of the Peoples Consultative Assembly here on Saturday.
He added that the Greek fiscal deficit was 60 percent, while Indonesias was less than 1.9 percent. “In terms of economic growth, we are showing positive growth, whereas the economic growth of Greece is in the negatives.”, Antara Agency reports as quoted by Mi’raj Islamic News Agency (MINA).
Therefore, Budimanta has urged all sides to be optimistic regarding the countrys financial conditions. They should not fear unfavorable conditions as the government has adopted pro-people policies so far.
The governments pro-people policies are reflected in the budget policy, which focuses on the development of villages. The budget allocated for this purpose was raised from Rp9.7 trillion in 2014 to Rp21 trillion this year.
Earlier, Head of Public Policy and the Economic Study Center of Gadjah Mada University Tony Prasetiantono had pointed out that Indonesia was still far from facing an economic crisis at par with the one in 1998, which was triggered by the weakening of the rupiah.
“The weakening of the rupiah in 1998 had caused its value to drop to Rp15,000 against the U. S. dollar. It is now Rp13,500 per U. S. dollar. Although the figure is nearly the same, the conditions in 1998 and those now are significantly different,” Prasetiantono emphasized on Thursday, July 2.
Furthermore, an economist of Standard Chartered Bank, Eric Sugandi, believes that the Greek crisis will have indirect impacts on Indonesias economic growth.
“Although not direct, the impacts will still be significant,” Sugandi remarked here on Monday.
He added that Greeces problems will not directly influence the Indonesian economy because it is not a primary investor in the country.
However, Indonesias economy will be affected indirectly because other countries that are business partners with Greece will feel the impacts.
Moreover, the economic growth of Indonesia will also be influenced by other external factors such as the appreciating value of the dollar against those of other currencies.
According to Sugandi, the “super dollar” phenomenon will affect financial channels, as well, while the rupiah continues to weaken with the strengthening of the dollar.
“The dollar will remain strong against the Euro and currencies of other emerging markets, including against Indonesias rupiah. Financial channels and psychological factors will feel the impacts,” he noted.
Unless Greece pays off debts worth 1.6 billion Euros to the International Monetary Fund, it will be declared bankrupt.
Also, several other European countries are willing to bailout Athens, stipulating requirements for a number of changes in its budget. (T/P010/R04)
Mi’raj Islamic News Agency (MINA)