JAKARTA. Fiscal reforms can help attract foreign inflows, while raising the nation’s benchmark interest rate may be counterproductive, a well-respected academic has said ahead of next year’s expected US interest-rate hike, which could result in funds flowing out of emerging markets and back to the world’s top economy. At the moment, too many government funds were earmarked for mandatory and subsidy spending, consequently limiting fiscal authorities’ ability to post higher growth that could help to attract inflows, said Ari Kuncoro, the dean of the University of Indonesia’s (UI) economics school, many of whose alumni are now senior fiscal and monetary authorities. “Our fiscal side is not really working,” Ari said recently in an interview at UI’s campus in Depok, West Java. “At times, when global interest rates are on the rise, it would be very helpful for BI [Bank Indonesia] if the fiscal side could play a role.”
Fiscal reforms could help RI prevent outflows
JAKARTA. Fiscal reforms can help attract foreign inflows, while raising the nation’s benchmark interest rate may be counterproductive, a well-respected academic has said ahead of next year’s expected US interest-rate hike, which could result in funds flowing out of emerging markets and back to the world’s top economy. At the moment, too many government funds were earmarked for mandatory and subsidy spending, consequently limiting fiscal authorities’ ability to post higher growth that could help to attract inflows, said Ari Kuncoro, the dean of the University of Indonesia’s (UI) economics school, many of whose alumni are now senior fiscal and monetary authorities. “Our fiscal side is not really working,” Ari said recently in an interview at UI’s campus in Depok, West Java. “At times, when global interest rates are on the rise, it would be very helpful for BI [Bank Indonesia] if the fiscal side could play a role.”