Even though the domestic economic foundation is strong, Indonesia is reminded by the International Monetary Fund to be aware of global challenges and risks.
Those global challenges and risks are related to global economic growth, which could be lower than projected, due to the economic consolidation of major countries not going as well as expected (Kompas, 28/4).
We can see that even though the global situation is relatively conducive and the momentum of global economic recovery is showing signs of strengthening, the global economy is still faced with uncertainty. The direction of US policy and China’s economic slowdown are still dominant factors contributing to the uncertainty, aside from other factors, such as the global geopolitical situation.
Finance Minister Sri Mulyani Indrawati in her capacity as chairperson of the Financial System Stability Committee (KKSK) also warned about the external and internal risks that currently confront Indonesia\'s economy. The external risks are related to US trade policies, which tend to be protectionist, and US taxation, which has impacts on the global investment climate. The geopolitical factor related to tensions with North Korea also needs to be watched out.
Internally, the risks stem from the pressure of rising problematic credits at banks and non-bank financial institutions, foreign investment flows, inflationary pressure stemming from administered prices of goods, and fiscal debt.
Prudence is an important message here, given that the domestic economy itself generally still shows mixed signals. The trade balance is relatively healthy, with a surplus trend amid improving commodity exports. Inflation is also under control; the rupiah is relatively stable.
On the other hand, even though fiscal structural reform has so far played a key role in safeguarding the stability of the domestic economy amid global economic weakness, fiscal risks remain a challenge for the government in the future, given the low tax revenues, the end of the tax amnesty and high demand for development financing, particularly infrastructure.
Do not let excessively expansive economic ambitions create new fiscal pressure, especially through rising debts.
Domestic demand has not yet fully recovered. The consolidation of banks and corporations is also relatively slow. In the real sector, aside from the improving exports, the rising number of business people is a positive signal.
Amid such global and domestic conditions, strengthening the orchestration of policies and synergy between all parties, including fiscal and monetary policies by the government, Bank Indonesia and the Financial Service Authority in the framework of maintaining the stability and momentum of Indonesia\'s accelerating economic growth, is important. Improving the investment climate and the quality of growth is still a big challenge for the government. The key is structural reform.
All of this also needs to be supported by a conducive situation in terms of politics, law, security and social affairs.