Indonesia bids to boost economy

By Richard High07 January 2009

Indonesia has announced plans to spend US$ 3.56 billion saved from its 2008 budget on infrastructure projects and tax breaks in an effort to stimulate its economy and mitigate the impact of the current global economic crisis, according to The Jakarta Post.

Making the announcement this week, Finance Minister Sri Mulyani Indrawati said more money could be available if needed. Ms Indrawati said the additional money could come from either a US$ 5.5 billion standby budget facility, co-coordinated by the World Bank, or new bonds.

The plan, which represents about 1.4% of Indonesia's forecast GDP in 2009, comes as the country experiences a drop in demand for its commodities during the global economic slowdown. With parliamentary and presidential elections due this year and economic growth expected to slow, the government has earmarked US$ 6.55 billion for projects such as roads, water and sanitation plants, irrigation, airport, ports, and railroads.

The government said the money could help the economy grow by as much as +5% this year and keep the unemployment rate flat, according to the The Jakarta Post.

The stimulus plan includes tax reliefs, direct funding for those business sectors worst hit by the crisis, additional financing schemes for infrastructure projects and net safety programs, added the report.

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