An AMRO mission led by Dr. Lee Jae Young conducted this year’s Annual Consultation Visit to Indonesia from 17 to 21 October 2016. Dr. Junhong Chang, AMRO Director, and Dr. Hoe Ee Khor, AMRO Chief Economist, joined part of the mission and met with Governor Agus D. W. Martowardojo and DG Perry Warjiyo of Bank Indonesia and Acting Head of Fiscal Policy Agency Suahasil Nazara of Ministry of Finance.
During the visit, AMRO staff had a series of meetings with the public sector, including Ministry of Finance, Bank Indonesia, Ministry of Trade, and other government agencies; the private sector; some international organizations, and several think tanks. During the meetings, AMRO staff discussed a wide range of issues regarding the economic outlook, risks and vulnerabilities, medium-to long-term growth prospects, and structural challenges. The discussions also focused on the appropriateness of policy measures, including fiscal policy, monetary policy, and structural reforms.
The mission team presented its preliminary assessment of the Indonesian economy to the Indonesian authorities and will prepare a final assessment report once the mission returns to Singapore. In its preliminary assessment, AMRO found that growth in the Indonesian economy has bottomed out and is being supported by private consumption and public investment, and is estimated at around 5.0 percent for 2016. In view of the low inflation, strong external position, and weak business sentiments, we welcome the recent monetary policy easing to shore up growth. On the fiscal front, the tax amnesty program has been relatively successful in raising revenue to fund essential infrastructure investment and other social programs in the period ahead.
In addition, the Indonesian government has enhanced the efficiency of expenditure to optimize the use of fiscal resources through elimination of unproductive and inefficient spending. AMRO would like to thank the Indonesian authorities for their kind hospitality and assistance in arranging the meetings. The visit to Indonesia has deepened AMRO’s understanding of the current macroeconomic and financial situation, as well as critical issues related to macroeconomic stability in Indonesia.