July 3, 2018 / 8:55 AM / 5 months ago

Indonesia to review capital goods imports to manage current account deficit

JAKARTA, July 3 (Reuters) - Indonesia will review capital goods imports for government projects to determine their necessity and control the economy’s current account deficit, Finance Minister Sri Mulyani Indrawati said on Tuesday.

“We will look at the content, whether a project is urgent to be completed and must import capital goods,” she told reporters, describing the measure as “a short-term correction for long term development”.

Indonesia’s current account deficit is expected to widen this year, but still be below the central bank’s healthy threshold of 2.5 percent of gross domestic product. Last year’s deficit was 1.7 percent.

Indonesia’s deficit has become a source of concern as emerging nations with sizable ones have been hit the hardest by capital outflows as U.S. interest rates rise.

Indrawati also said companies must be prepared to take steps to absorb shocks in their balance sheet due to the effect of the weaker rupiah and higher interest rates. (Reporting by Maikel Jefriando Writing by Gayatri Suroyo; Editing by Richard Borsuk)

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