The Governor of Bank Indonesia says economic growth in 2007 will be in the 5.3 – 6.3% range, implicitly casting into doubt the government’s budgetary forecast of 6.3%.

Three scenarios were outlined by the governor, Burhanuddin Abdullah, when speaking on the 11th to the parliamentary Commission on Finance and Banking. The most pessimistic prediction was in the 5.3-5.7% range, with the middle band being 5.7-6.0% and the most optimistic at 6.0-6.3%. The government’s official estimate for growth next year, contained in the proposed 2007 budget, is 6.3%, with Burhanuddin Abdullah’s analysis clearly casting doubt on the likelihood that this will be achieved.

We judge that growth of 6.3% is the upper limit, according to Bank Indonesia’s estimates.
(Kami menilai pertumbuhan 6,3 persen itu ada pada batas atas perkiraan Bank Indonesia.)

In order to attain the 6.3% rate of growth, he said, the government would have to work harder, above all in creating a conducive investment environment, helping to increase productivity and efficiency, and in creating more export growth.

However Sri Mulyani, the Finance minister, reaffirmed the government’s view that 6.3% was a realistic goal, saying that the macro-economic fundamentals of the country were sound. She also added that the passing of new laws to reform taxation and investment rules would see investment growth at over 10% for 2007.

Meanwhile, in the same meeting with parliamentarians, BI governor Burhanuddin Abdullah averred that his bank was optimistic that the Indonesian rupiah would hold steady at around 9200 to the dollar, by year’s end. In the first half of the year the currency averaged at 9183 per US dollar. The budgetary forecast for 2007 is 9300. Positive developments on the home front would see an inflow of foreign investment capital, helping to strengthen the rupiah, he said.