No.201/HMS/XII/01

Press Release

            The Government of the Republic of Indonesia signed its fourth Letter of Intent (LoI) to the International Monetary Fund (IMF) on December 13, 2001.  It pledged a new round of economic reforms with specific targets.  Signing the LoI were Coordinating, Minister for the Economy, Dorodjatun Kuntjoro-Jakti, Minister of Finance Boediono, and Bank Indonesia Governor Sjahril Sabirin.

            The strategy for 2002 has been developed within the context of a significant deterioration in the global economic outlook.  It also recognizes the need to restore confidence among domestic and foreign investors.  The signing of this is part of a $5 billion loan package of the IMF since the financial crisis in 1997.  In light of the LoI, the Government of Indonesia is committed to further reforming its financial sector, privatisation of its state owned company as well as  legal and governance issues.

            Meanwhile, Bank of Indonesia Governor Sjahril Sabirin said that economic condition in the IVth quarter of 2001 was marked by the upward trend of demand in line with an increase in various activities attributed to the month of Ramadhan and the year-end seasonal activities. As a result the GDP in the IVth quarter is expected to reach 3.5% - 4%. However, such an increase in the economic activities is also accompanied by an increase in prices which tends to persist. In this light, monetary control policies must remain with a view to maintaining monetary stability and the economic recovery momentum.

            At the same time, Coordinating Minister for Economy Dorodjatun Kuntjoro-Jakti stated that Indonesia aimed to reach an annual economic growth of 6-7 percent in the coming years, adding that poverty and unemployment would be hard to cut if GDP growth remained at 3-5 percent.

            We want to see economic growth reach 6-7 percent in the coming years, he stated  adding that, “we can't rely on the current GDP growth at 3-5 percent because it will be difficult to cut unemployment and absolute poverty…". Indonesia’s economic growth rates of 3.5% to 4% in the last quarter of this year demonstrates a significant achievement to foster its macroeconomic stability. Indonesia’s economic growth rates are encouraging especially when compared to other growth rates in the region.

            Based on this achievement, the government will focus more on the domestic economy to stimulate on-going growth prospects while at the same time expanding its economy to take advantage of regional and international market opportunities.

                                                                        New York, 20 December 2001