MACROECONOMICS - JAKARTA. University of Indonesia economist Fasial Basri has warned of a possible “minor economic crisis” in December because of “reckless” government policies, particularly massive infrastructure construction.
“It is possible there will be a small crisis in December, a crisis created by the government,” said Faisal during a discussion in Jakarta on Thursday as quoted by tempo.co.
Faisal said massive infrastructure development had not been well planned. He said problems were likely to emerge in the construction of several airports that had forced the government to spend vast amounts of money.
On the other hand, he said, the government was unlikely to achieve its tax revenue target. He estimated the shortfall would reach Rp 200 billion (US$14.8 million) this year.
“Like it or not, the government will have to swallow a bitter pill because tax revenue will be far from the target and problems will mount at the end of the year,” he added.
Faisal also criticized Bank Indonesia for cutting its benchmark rate. He believed the weakening of the rupiah against the US dollar was a result of the BI policy.
As a consequence, he said, BI has had to use its foreign exchange reserve to prevent the rupiah from further weakening. “If BI did not intervene, the rupiah exchange rate could not be maintained at the 14,000 level,” Faisal added.
He said the government would still face problems in the first quarter of 2018.
