Sri Mulyani Optimistic No Significant Impact of UK Crisis on Indonesia

TEMPO.CO, Jakarta - Indonesia’s Finance Minister Sri Mulyani Indrawati has expressed optimism that the Indonesian economy is still strong to deal with the impact of the increasingly severe crisis in the United Kingdom.

She assessed that the economic pressures experienced by the UK were caused by its government's policies. “It's specifically because of their own policies, but it can also affect the sentiment as it happened sequentially when the US Federal Reserve raises [benchmark interest rate] by 75 basis points,” said Sri at Jakarta Kempinski Hotel on Thursday, September 29, 2022.

The condition, she ensured, will not cause a significant impact on the Indonesian economy. Moreover, the government continues to maintain its fiscal consolidation policy in a bid to keep the state revenue and spending budget at healthy status.

With a healthy state budget, supported by high growth in state revenues, prudent state spending, and lower issuance of securities, the former managing director of the World Bank is optimistic that Indonesia will not face a crisis like the UK.

As reported by Reuters on Wednesday, 57% of British consumers have been severely or moderately affected by the cost of living crisis so far. In three months, the figure is expected to rise to 76%, according to a market researcher NielsenIQ. They are contending with 9.9% inflation in August and the figure is expected to rise further this year, which is driven mostly by the surge in energy prices. 

“What happens in the UK, in which its pound exchange rate falls by 20 percent, is because the state budget becomes a shock producer. The situation we are facing must indeed be handled carefully, flexible but still accountable,” said Sri Mulyani.

ARRIJAL RACHMAN

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