Govt Preparing Mitigation Steps to Face Global Crisis

Jakarta - The government is preparing mitigation steps to anticipate possible economic upheavals because of the crises engulfing the United States and Europe, a Finance Ministry official said. "The government will always keep watch for the impact (of the crises) on the global economy by taking various mitigation steps including speeding up budget spending, stabilizing the market using budget leftover, and buying back state debt securities through bond stabilization framework," acting chief of the ministry's fiscal policy board Bambang Brodjonegoro told a press conference here on Tuesday. He said this crisis protocol management would also be supported by the allocation of mitigation funds in the revised 2011 state budget and the policy would begin to take effect after there had been signs of crisis. "There are many phases we have to pass through. If the market is ready we can buyback (state debt securities) using state budget fund or budget leftover. These will be done based on, for instance, if state debt securities fall by basis points. And when the yield of state debt securities drop by several basis points, then what we will do?" he said. He said the fundamentals of the Indonesian economy were currently quite good and strong although the Jakarta composite index was still under pressure and the rupiah's exchange rate weakened. "The rupiah's depreciation is manageable because it is still trading at a level of Rp8500 per dollar. That makes us quite relieved. Normally, if the stock exchange is affected, the rupiah will be affected significantly. This time the stock exchange is significantly affected but the rupiah is controllable," he said. He said the global stock exchange was weakening following worldwide concerns about the US economic slowdown and debt troubles in Europe. "In addition, Japan and China are still facing risks. The Japanese industrial and export sectors are still weakening in the wake of tsunami. Meanwhile, the Chinese manufacturing sector still shows signs of slowdown with the June inflation recorded at 6.4 percent," he said.