{
  "title": "IMF Executive Board Concludes 2019 Article IV Consultation with Indonesia",
  "publication": "IMF News, July 31, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/07/31/pr19305-indonesia-imf-executive-board-concludes-2019-article-iv-consultation-with-indonesia",
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  "summary": "Real GDP growth stabilized at above 5 percent.",
  "publishDate": "2019-07-31",
  "sections": [
    {
      "heading": "Economic performance in 2018",
      "content": "- Real GDP growth stabilized at above 5 percent.\n- Domestic demand was robust and offset a decline in net exports.\n- Credit growth recovered and supported economic activity.\n- Inflation eased to around 3 percent, the lower half of the official target band (3.5±1percent); core inflation is stable at 3 percent.\n- The current account deficit widened to 2.98 percent of GDP in 2018 (1.6 percent in 2017), mainly due to lower commodity exports and higher infrastructure-related imports.\n- The authorities eliminated the primary deficit in 2018."
    },
    {
      "heading": "Outlook and IMF staff projections",
      "content": "- Real GDP growth is projected to remain stable at 5.2 percent in 2019 and 2020, and rise to the level of potential (5.3 percent) over the medium term.\n- Credit growth is projected to be about 12 percent, supported by strong bank balance sheets and continued economic growth.\n- Inflation is projected to remain within the target band.\n- The current account deficit is projected to continue its gradual decline to 2.6 percent of GDP over the medium term.\n- The fiscal deficit is projected to remain constant at 1.8 percent of GDP."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Risks are tilted to the downside and are mainly external:\n  - Rising trade tensions.\n  - Sharp tightening of global financial conditions.\n  - Weaker-than-expected growth in China.\n  - Large swings in commodity prices, especially higher oil prices that would translate into higher current account deficit.\n- Upside scenario:\n  - The start of the Administration’s second term could lead to intensified reform efforts, boosting confidence, investment, and growth."
    },
    {
      "heading": "Executive Board assessment and recommendations",
      "content": "- Directors commended the authorities’ policy response to 2018 external headwinds and noted the favorable outlook while urging vigilance against risks, including capital flow reversals given Indonesia’s reliance on external financing.\n- Structural reform package needed to achieve higher potential growth, including:\n  - Higher domestic revenue mobilization.\n  - Financial deepening.\n  - Complementary reforms in human capital, infrastructure, and labor and products markets.\n- Near‑term policy mix:\n  - Appropriate focus on protecting macroeconomic and financial stability, safeguarding buffers, and addressing vulnerabilities.\n  - Support for maintaining a neutral fiscal stance.\n  - Close assessment of macroprudential policies to ensure financial system stability.\n  - With inflation within the target band, scope for cautious relaxation of the monetary policy stance, unless significant capital account pressures reemerge.\n  - Encourage allowing the exchange rate to move in line with market forces, with FX intervention limited to preventing disorderly market conditions.\n- Fiscal and revenue policy:\n  - Welcome for protecting fiscal buffers and improving quality of spending by rebalancing expenditure toward infrastructure, education, health, and social safety nets.\n  - Noted that government revenues remain below peer countries and are insufficient to finance development goals.\n  - Highlighted critical need to implement a medium‑term revenue strategy that combines well‑sequenced and prioritized tax policy and administration reforms to finance priority spending and structural reforms and lessen reliance on external financing.\n  - Monitor risks and contingent liabilities from state‑owned enterprises and public‑private partnerships.\n- Structural and governance reforms:\n  - Commended efforts to improve infrastructure, streamline regulations, and reform education and health sectors.\n  - Encouraged expanding efforts and addressing remaining structural impediments to higher growth, including strengthening governance and the business environment.\n  - Priority actions: improving human capital, increasing female labor participation, easing restrictions to foreign direct investment, and streamlining labor and product market regulations.\n- Financial sector oversight and crisis management:\n  - Welcomed progress in strengthening frameworks in line with FSAP recommendations.\n  - Encouraged focus on FSAP-identified areas needing improvement: clarifying institutional mandates; improving supervision of nonbank financial institutions and financial conglomerates; strengthening the legal framework for financial oversight and crisis management; and enhancing crisis management frameworks.\n  - Continued strengthening of the AML/CFT regime was also encouraged."
    },
    {
      "heading": "Selected economic indicators and key statistics (2014–2020, as presented)",
      "content": "- Real GDP (percent change): 2014: 5.0; 2015: 4.9; 2016: 5.1; 2017: 5.2; 2018: (not listed in table but described above); 2019 Proj.: 5.2; 2020 Proj.: 5.2\n- Domestic demand (percent change): 2016: 6.3; 2017: 5.4\n- Private consumption 1/: 2014: 5.3; 2015: 4.8\n- Government consumption: 2016: 1.2; 2017: -0.1; 2018: 2.1; 2019 Proj.: 4.5\n- Gross fixed investment: 2016: 4.4; 2017: 6.2; 2018: 6.7; 2019 Proj.: 5.9\n- Change in stocks 2/: 2016: 0.5; 2017: -0.6; 2018: 0.2; 2019 Proj.: 0.7; 2020 Proj.: 0.0\n- Net exports 2/: 2014: -0.2; 2015: 0.9; 2016: 0.1; 2017: 0.3; 2018: -1.0\n- Gross investment 3/ (percent of GDP): 2014: 34.6; 2015: 34.1; 2016: 33.9; 2017: 33.7; 2018: 34.5; 2019 Proj.: 34.7; 2020 Proj.: 34.9\n- Gross national saving (percent of GDP): 2014: 31.5; 2015: 32.0; 2016: 32.1; 2017: 31.4; 2018: 31.8\n- Consumer prices (end period, 12-month percent change): 2014: 8.4; 2015: 3.4; 2016: 3.0; 2017: 3.6; 2018: 3.1\n- Consumer prices (period average, 12-month percent change): 2014: 6.4; 2015: 3.5; 2016: 3.8; 2017: 3.2\n- General government revenue (percent of GDP): 2014: 16.5; 2015: 14.9; 2016: 14.3; 2017: 14.1; 2018: 14.8\n- General government expenditure (percent of GDP): 2014: 18.6; 2015: 17.5; 2016: 16.8; 2017: 16.6; 2018: 16.7\n- Energy subsidies (percent of GDP, part of expenditure): 2018: 1.0\n- General government balance (percent of GDP): 2014: -2.1; 2015: -2.6; 2016: -2.5; 2017: -1.8\n- Primary balance (percent of GDP): 2016: -0.9; 2017: -1.2\n- General government debt (percent of GDP): 2014: 24.7; 2015: 27.0; 2016: 28.0; 2017: 29.4; 2018: 30.1; 2019 Proj.: 30.2; 2020 Proj.: 29.9\n- Rupiah M2 (12-month percent change; end of period): 2014: 13.3; 2015: 9.2; 2016: 11.7; 2017: 9.6; 2018: 5.8\n- Base money (12-month percent change; end of period): 2014: 11.6; 2015: 9.7; 2016: -1.5\n- Private Sector Credit (12-month percent change; end of period): 2014: 11.8; 2015: 10.3; 2016: 7.7; 2017: 8.7; 2018: 12.0; 2019 Proj.: 12.3; 2020 Proj.: 12.4\n- One-month interbank rate (period average): 2014: 7.5; 2015: 7.1; 2016: 6.5; 2017: 5.6\n- Current account balance (in billions of U.S. dollars): 2014: -27.5; 2015: -17.5; 2016: -17.0; 2017: -16.2; 2018: -31.1; 2019 Proj.: -32.4; 2020 Proj.: -34.7\n- Current account balance (percent of GDP): 2014: -3.1; 2015: -2.0; 2016: -1.6; 2017: -3.0; 2018: -2.9\n- Trade balance (in billions of U.S. dollars): 2014: 7.0; 2015: 14.0; 2016: 15.3; 2017: 18.8; 2018: -0.4; 2019 Proj.: -4.6\n- Oil and gas (net, in billions of U.S. dollars): 2014: -11.8; 2015: -5.7; 2016: -4.8; 2017: -7.3; 2018: -11.6\n- Inward direct investment (in billions of U.S. dollars): 2014: 21.8; 2015: 3.9; 2016: 20.6; 2017: 22.0; 2018: 23.7\n- Overall balance (in billions of U.S. dollars): 2014: 15.2; 2015: -1.1; 2016: 12.1; 2017: -7.1; 2018: 2.8\n- Terms of trade, percent change (excluding oil): 2014: 1.4; 2015: 0.4; 2016: 1.3; 2017: 1.1\n- Gross reserves (in billions of U.S. dollars, end period): 2014: 111.9; 2015: 105.9; 2016: 116.4; 2017: 130.2; 2018: 120.7; 2019 Proj.: 121.9; 2020 Proj.: 124.7\n- Gross reserves (in months of prospective imports of goods and services): 2014: 8.1; 2015: 8.0; 2016: 7.6; 2017: 7.2; 2018: 6.0; 2019 Proj.: 5.7\n- Gross reserves (as a percent of short-term debt 4/): 2014: 189; 2015: 191; 2016: 213; 2017: 237; 2018: 203; 2019 Proj.: 185; 2020 Proj.: 171\n- Total external debt 5/ (in billions of U.S. dollars): 2014: 293.3; 2015: 310.7; 2016: 320.0; 2017: 352.5; 2018: 376.8; 2019 Proj.: 415.0; 2020 Proj.: 455.2\n- Total external debt (percent of GDP): 2014: 32.9; 2015: 36.1; 2016: 34.3; 2017: 36.9; 2018: 37.7\n- Rupiah per U.S. dollar (period average): 2014: 11,862; 2015: 13,391; 2016: 13,306; 2017: 13,383; 2018: 14,231\n- Rupiah per U.S. dollar (end of period): 2014: 12,435; 2015: 13,788; 2016: 13,473; 2017: 13,568; 2018: 14,390\n- Jakarta Stock Exchange (12-month percentage change, composite index): 2014: 22.3; 2015: -12.1; 2016: 20.0\n- Oil production (thousands of barrels per day): 2014: 794; 2015: 800; 2016: 820; 2017: 815; 2018: 740; 2019 Proj.: 710\n- Nominal GDP (in trillions of rupiah): 2014: 10,570; 2015: 11,526; 2016: 12,402; 2017: 13,587; 2018: 14,826; 2019 Proj.: 16,047; 2020 Proj.: 17,409\n\nPress Release No. 19/305, July 31, 2019 — IMF Communications Department.\n\n---\n\n Content in this bundle\n\n- Press release\n  - Press release (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Press release (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Indonesia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/07/31/pr19305-indonesia-imf-executive-board-concludes-2019-article-iv-consultation-with-indonesia"
    }
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    "Published: July 31, 2019",
    "Real GDP growth stabilized at above 5 percent.",
    "Domestic demand was robust and offset a decline in net exports.",
    "Credit growth recovered and supported economic activity.",
    "Inflation eased to around 3 percent, the lower half of the official target band (3.5±1percent); core inflation is stable at 3 percent.",
    "The current account deficit widened to 2.98 percent of GDP in 2018 (1.6 percent in 2017), mainly due to lower commodity exports and higher infrastructure-related imports.",
    "The authorities eliminated the primary deficit in 2018.",
    "Real GDP growth is projected to remain stable at 5.2 percent in 2019 and 2020, and rise to the level of potential (5.3 percent) over the medium term.",
    "Credit growth is projected to be about 12 percent, supported by strong bank balance sheets and continued economic growth.",
    "Inflation is projected to remain within the target band.",
    "The current account deficit is projected to continue its gradual decline to 2.6 percent of GDP over the medium term.",
    "The fiscal deficit is projected to remain constant at 1.8 percent of GDP.",
    "Risks are tilted to the downside and are mainly external:",
    "Upside scenario:",
    "Directors commended the authorities’ policy response to 2018 external headwinds and noted the favorable outlook while urging vigilance against risks, including capital flow reversals given Indonesia’s reliance on external financing.",
    "Structural reform package needed to achieve higher potential growth, including:",
    "Near‑term policy mix:",
    "Fiscal and revenue policy:",
    "Structural and governance reforms:",
    "Financial sector oversight and crisis management:",
    "Real GDP (percent change): 2014: 5.0; 2015: 4.9; 2016: 5.1; 2017: 5.2; 2018: (not listed in table but described above); 2019 Proj.: 5.2; 2020 Proj.: 5.2",
    "Domestic demand (percent change): 2016: 6.3; 2017: 5.4",
    "Private consumption 1/: 2014: 5.3; 2015: 4.8",
    "Government consumption: 2016: 1.2; 2017: -0.1; 2018: 2.1; 2019 Proj.: 4.5",
    "Gross fixed investment: 2016: 4.4; 2017: 6.2; 2018: 6.7; 2019 Proj.: 5.9",
    "Change in stocks 2/: 2016: 0.5; 2017: -0.6; 2018: 0.2; 2019 Proj.: 0.7; 2020 Proj.: 0.0",
    "Net exports 2/: 2014: -0.2; 2015: 0.9; 2016: 0.1; 2017: 0.3; 2018: -1.0",
    "Gross investment 3/ (percent of GDP): 2014: 34.6; 2015: 34.1; 2016: 33.9; 2017: 33.7; 2018: 34.5; 2019 Proj.: 34.7; 2020 Proj.: 34.9",
    "Gross national saving (percent of GDP): 2014: 31.5; 2015: 32.0; 2016: 32.1; 2017: 31.4; 2018: 31.8",
    "Consumer prices (end period, 12-month percent change): 2014: 8.4; 2015: 3.4; 2016: 3.0; 2017: 3.6; 2018: 3.1",
    "Consumer prices (period average, 12-month percent change): 2014: 6.4; 2015: 3.5; 2016: 3.8; 2017: 3.2",
    "General government revenue (percent of GDP): 2014: 16.5; 2015: 14.9; 2016: 14.3; 2017: 14.1; 2018: 14.8",
    "General government expenditure (percent of GDP): 2014: 18.6; 2015: 17.5; 2016: 16.8; 2017: 16.6; 2018: 16.7",
    "Energy subsidies (percent of GDP, part of expenditure): 2018: 1.0",
    "General government balance (percent of GDP): 2014: -2.1; 2015: -2.6; 2016: -2.5; 2017: -1.8",
    "Primary balance (percent of GDP): 2016: -0.9; 2017: -1.2",
    "General government debt (percent of GDP): 2014: 24.7; 2015: 27.0; 2016: 28.0; 2017: 29.4; 2018: 30.1; 2019 Proj.: 30.2; 2020 Proj.: 29.9",
    "Rupiah M2 (12-month percent change; end of period): 2014: 13.3; 2015: 9.2; 2016: 11.7; 2017: 9.6; 2018: 5.8",
    "Base money (12-month percent change; end of period): 2014: 11.6; 2015: 9.7; 2016: -1.5",
    "Private Sector Credit (12-month percent change; end of period): 2014: 11.8; 2015: 10.3; 2016: 7.7; 2017: 8.7; 2018: 12.0; 2019 Proj.: 12.3; 2020 Proj.: 12.4",
    "One-month interbank rate (period average): 2014: 7.5; 2015: 7.1; 2016: 6.5; 2017: 5.6",
    "Current account balance (in billions of U.S. dollars): 2014: -27.5; 2015: -17.5; 2016: -17.0; 2017: -16.2; 2018: -31.1; 2019 Proj.: -32.4; 2020 Proj.: -34.7",
    "Current account balance (percent of GDP): 2014: -3.1; 2015: -2.0; 2016: -1.6; 2017: -3.0; 2018: -2.9",
    "Trade balance (in billions of U.S. dollars): 2014: 7.0; 2015: 14.0; 2016: 15.3; 2017: 18.8; 2018: -0.4; 2019 Proj.: -4.6",
    "Oil and gas (net, in billions of U.S. dollars): 2014: -11.8; 2015: -5.7; 2016: -4.8; 2017: -7.3; 2018: -11.6",
    "Inward direct investment (in billions of U.S. dollars): 2014: 21.8; 2015: 3.9; 2016: 20.6; 2017: 22.0; 2018: 23.7",
    "Overall balance (in billions of U.S. dollars): 2014: 15.2; 2015: -1.1; 2016: 12.1; 2017: -7.1; 2018: 2.8",
    "Terms of trade, percent change (excluding oil): 2014: 1.4; 2015: 0.4; 2016: 1.3; 2017: 1.1",
    "Gross reserves (in billions of U.S. dollars, end period): 2014: 111.9; 2015: 105.9; 2016: 116.4; 2017: 130.2; 2018: 120.7; 2019 Proj.: 121.9; 2020 Proj.: 124.7",
    "Gross reserves (in months of prospective imports of goods and services): 2014: 8.1; 2015: 8.0; 2016: 7.6; 2017: 7.2; 2018: 6.0; 2019 Proj.: 5.7",
    "Gross reserves (as a percent of short-term debt 4/): 2014: 189; 2015: 191; 2016: 213; 2017: 237; 2018: 203; 2019 Proj.: 185; 2020 Proj.: 171",
    "Total external debt 5/ (in billions of U.S. dollars): 2014: 293.3; 2015: 310.7; 2016: 320.0; 2017: 352.5; 2018: 376.8; 2019 Proj.: 415.0; 2020 Proj.: 455.2",
    "Total external debt (percent of GDP): 2014: 32.9; 2015: 36.1; 2016: 34.3; 2017: 36.9; 2018: 37.7",
    "Rupiah per U.S. dollar (period average): 2014: 11,862; 2015: 13,391; 2016: 13,306; 2017: 13,383; 2018: 14,231",
    "Rupiah per U.S. dollar (end of period): 2014: 12,435; 2015: 13,788; 2016: 13,473; 2017: 13,568; 2018: 14,390",
    "Jakarta Stock Exchange (12-month percentage change, composite index): 2014: 22.3; 2015: -12.1; 2016: 20.0",
    "Oil production (thousands of barrels per day): 2014: 794; 2015: 800; 2016: 820; 2017: 815; 2018: 740; 2019 Proj.: 710",
    "Nominal GDP (in trillions of rupiah): 2014: 10,570; 2015: 11,526; 2016: 12,402; 2017: 13,587; 2018: 14,826; 2019 Proj.: 16,047; 2020 Proj.: 17,409",
    "**Press release**",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Indonesia and the IMF](http://www.imf.org/external/country/IDN/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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