Nusa Dua, Bali – The world remains committed on fiscal opportunities until 2030 and this issue is essential for Indonesia, Director for the Department for Fiscal Affairs at the IMF Vitor Gaspar says. Vitor delivered the statements when opening a press briefing on Fiscal Monitor at the Media Room Bali International Convention Centre, the main arena of the Annual Meetings of the IMF-World Bank Group 2018 in Nusa Dua, Bali, Wednesday, 10 October 2018.
He added global debt growth was rising amounting US$182 trillion in 2017. Private sector contributes the largest portion of the amount while public debt remains at fair level thanks to rescuing efforts by the governments.
In emerging countries, private debts increase while public debts go down. In China, these two are unclear given its centralistic characteristic, unlike the governments of the emerging countries that work on improving the welfare of their citizens for achieving SDGs. Gaspar said the governments of the emerging markets were even allocating 40 percent of their Gross Domestic Products as parts of efforts to attain the SDGs.
“Most of them have their own homework to fix various policies they have issued,” he said.
In response to questions about Indonesia, Gaspar gives inputs on the importance of transparency in the public sector and infrastructure establishment strategic development. This is of course in line with the attempts from the government that keeps working on infrastructure financing by applying blended finance scheme.
He advised the government of Indonesia to maintain trade balance as this would make investors comfortable. “For Indonesia, there is net rise 6.5 percent from its Gross Domestic Product,” he said.
He added that the government also needed to pay attention on public spending efficiency because this would add the Gross Domestic Product. This matter is also important as common theme in fiscal monitoring is economy projection in the long run. He admitted that Indonesia had been recording extraordinary improvements in the past 50 years as seen from the Gross Domestic Product and other indicators, such as health, decreased mortality rate and others.
“Aside from advanced strategy for this matter, investment on human resources becomes another key. Hence, existing efforts to build infrastructure must be accompanied with human resources projects, and those can’t be separated from the increase of qualities in education and health sectors,” he said.
Besides, Indonesia needs to keep repairing taxation system because the developments won’t mean so much if taxation system reformation isn’t conducted. Revenue percentage from the tax sector in Indonesia remains low, very well below standard level.
“All of the topics are discussed in “Realizing Indonesia Economic Potential,” he said.
For South Africa, UK and Italy, Paulo Mauro from the same department of the IMF said that South Africa was repairing regulations and transparency given many aspects that were requiring improvements. He said that South Africa must focus on the high debt ratio. He added South Africa also needed to keep applying efficiency measures in education sector.
“While for UK and Italy, our suggestions are consistent in a few years to come. This is important to secure Italy from debt risks. Public financing in Italy is essential element for its economy stability,” he said.
Speaking on China, the IMF department states that the country is balancing its economy situation. High growth quality of the country now instead becomes a pressure as emphasized aspect lies on quantity, not quality.
Answering questions from a Chinese journalist, Gaspar suggested the country that is under the leadership of Xi Jin Ping must change its orientation: from investment to consumption, from export to domestic demand, from growth to equality. This advice correlates with the country’s public finance that is stronger at national level compared to that of the local one.
While for developed nations with many assets, IMF finds that finance assets 99 percent reflect the Gross Domestic Product of the countries. He said that Indonesia was a country that was having natural resources as assets worth 60 percent of the Gross Domestic Product. Russia owns assets in forms of natural resources which is bigger than its Gross Domestic Product.
“Our recommendation is (the Russian government) must be transparent on public wealth and use it to achieve national goals previously set,” Gaspar said.
To close his statements, Gaspar expresses his condolences for the victims of the earthquakes in Lombok and Palu and appreciates Indonesia for the chosen of Nusa Dua as the host of the Annual Meetings. For him, Nusa Dua is an incredible place.(3x3)