Prabowo's defense on the Dollar, Minister of Finance: Our Economic Fundamentals are Good

JAKARTA - Minister of Finance (Menkeu) Purbaya Yudhi Sadewa explained President Prabowo Subianto's statement about villagers not using dollars. He said the statement was made in the context of talking to the village community, it does not mean that the President ignores the impact of exchange rates on the economy.

"That's talking in the countryside, the context is there. It doesn't mean that Mr. President doesn't understand the rupiah. He is a genius, really," said Minister of Finance Purbaya at the Presidential Palace Complex, Jakarta, Monday (18/5).

Purbaya said that the statement was a popular language to calm the public. According to him, the impact of the weakening of the rupiah on imported inflation or inflation due to rising prices of imported goods is not always immediately felt to be large.

"Imported inflation is theoretically not too significant," he said.

He admitted that the exchange rate was under pressure. However, Purbaya estimated that market pressure began to ease by mid-week. Because the government has started to enter the bond market or government debt gradually.

"The government has entered the bond market little by little, foreigners are also starting to enter, so the pressure on bonds should be reduced," he said.

According to Purbaya, if the pressure in the bond market decreases, negative sentiment towards the exchange rate will also ease.

He emphasized that the basic conditions of the Indonesian economy are still strong. Purbaya said the state budget report until April would show good results.

"Our foundation is really good, so you don't have to worry," he said.

Purbaya also denied the assumption that the state budget was in trouble. He said Indonesia's fiscal was still in good condition and the government's strategy was not only based on state spending.

"Our economic fundamentals are good, our fiscal is good," he said.

According to Purbaya, the government is also encouraging the private sector to move. He said the 5.6 percent economic growth in the first quarter was not only supported by government spending.

Purbaya detailed that from the 5.6 percent growth, about 2.9 percent came from consumer spending, 1.7 percent from investment, and 1.3 percent from government spending. The rest comes from exports and imports.

"The one who drives and contributes the most to growth is public spending. Its purchasing power is still quite good," he said.

He said the 5.6 percent growth in the first quarter was achieved when the global economy was turbulent. Therefore, Purbaya asked the public not to panic in the face of exchange rate pressures.

"Don't worry. We are really improving the economy and it is already visible," said Purbaya.