TEMPO.CO, Jakarta - Finance Minister Bambang Brodjonegoro has assured that there are no reason to assume that Indonesia is at the brink of a financial crisis, despite the continuous depreciation of the Rupiah against the US Dollar.
"When we analyze the fundamentals, the situation is still in control - and there are no indications of an impending crisis," said Bambang in Jakarta on Friday, July 31, 2015.
The Finance Minister explained that after several Forums for the Coordination of the Financial System's Stability meetings, it could be concluded that Indonesia's economic fundamentals are still in good shape - quite the contrary to the situation in 1998, where the Rupiah's depreciation is accompanied by inflation rate that spiralled out of control.
"Inflation is still in control. In 1998, when the Rupiah depreciated sharply, it happened along with soaring inflation, as well as a negative economic growth, which reached -14 percent," said Bambang, before adding that Indonesia's economy is still growing, albeit slightly slower.
The Minister also reiterated that the Rupiah's predicament is caused by the US Dollar's appreciation rather than the depreciation of the Rupiah itself - especially ahead of the Federal Reserve Bank of America's plan to raise its' fund rate, which continues to be riddled with uncertainties, which drives up speculation among global market players.
That said, Bambang said that the government and investors had already factored in the possibility, especially since it has already been assumed that the Fed will raise its' fund rate sometimes later on in the year.
"The Federal Open Market Committee (FOMC) meetings of late has stated that the US economy is indeed recovering - which creates uncertainties as to when the Fed will actually raise its' fund rate," said Bambang.
"When it rises, there will be an impact on the economy - but it won't be significant," said Bambang.