Publication: Indonesia Economic Quarterly, March 2015: High Expectations
Date
2015-03
ISSN
Published
2015-03
Author(s)
World Bank
Abstract
Effective January 1, 2015, Indonesia’s new government took the decisive step of
implementing a new fuel pricing system, dramatically reducing gasoline and diesel
subsidy costs. This paved the way for the government’s first budget, passed in
February, to shift spending towards development priorities, especially infrastructure,
the allocation for which is double the 2014 outturn. Successful implementation of
the bold vision of the budget, however, will require overcoming administrative
constraints to spending and dramatically lifting revenue collection performance.
Achieving this, and having the benefits flow through into faster economic growth
and poverty reduction, is likely to take time, especially with the pace of sustainable
economic growth having slowed, due partly to lower commodity prices. Beyond the
fiscal sector, reforms taken in the first months of the government’s term in key
areas such as investment licensing also face complex challenges to make operational.
The government has signaled its strong reform intentions, and raised expectations.
Early progress will now need to be consolidated by effectively implementing major
reforms and the budget posture, against a still-challenging global economic
backdrop for Indonesia.
Citation
“World Bank. 2015. Indonesia Economic Quarterly, March 2015 : High Expectations. © Washington, DC. http://openknowledge.worldbank.org/handle/10986/22505 License: CC BY 3.0 IGO.”