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As part of a newly launched package of economic policies, the
government will set up a macro early warning system to prevent a
recurrence of the 1998 economic crisis.
"The government and Bank Indonesia will establish a work unit to
monitor various economic indicators, based on which it will be able to
detect the real condition in the economy," Coordinating Minister for
the Economy Boediono said at the launch of the long-awaited economic
policy package Tuesday.
The planned establishment of the early warning system is part of 44
programs to be instituted by the government in the financial sector as
part of its new economic policy package.
Other important measures to be taken include the establishment of the
Financial Sector Stability Forum .
"The existence of this forum will be quite important as it will provide
a mechanism for discussing how the government and the central bank
should do their jobs in dealing with a crisis," he said.
Also during the announcement of the economic policy package, Finance
Minister Sri Mulyani Indrawati said that she and the central bank
governor would soon sign a joint decree on a number of important
aspects related to the establishment of the forum.
"The joint decree will outline various issues concerning the forum's
work mechanisms and resources," she said, adding that besides the
establishment of the early warning system and the forum, the new
package of economic policies for the financial sector would also
include the drafting of a bill on a safety-net program for the
financial sector and a blueprint for the development of the financial
system, to be known as the Indonesian Financial System Architecture.
Boediono said that the latest financial sector reforms included in the
economic policy package were follow-up to the financial reform policies
issued in the middle of 2006.
He said that a number of programs instituted as part of the previous
financial sector reform policy package had been successfully
implemented, including those related to the settlement of
non-performing loans at state banks, and the treatment of ailing
insurance companies.
The previous financial sector reform policy package also included
policies that were aimed to supporting diversification of financing for
business expansion.
To this end, the government had issued regulations to support the
operation of a bond repo market, the development of a sharia-based
capital market, the issuance of government retail bonds, and the
drafting of a regulation on sukuk, or sharia-based financial
instruments.
Boediono said that these programs formed part of the 55 programs
carried out from July 2006 up to the end of the first quarter of this
year.
"The actions which are scheduled to be implemented after this quarter,
and those which have not yet been completed, are included in the newly
issued policy package," he said.
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