Indonesia to announce new economic stimulus package in Oct

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A money changer stacking Indonesian rupiah notes as he serves a customer in Jakarta. Concerns are mounting over Indonesia's slowing economy, high inflation and current account deficit.
Reuters

JAKARTA - Indonesia will announce a second fiscal stimulus package this month as part of efforts to cut a ballooning current account deficit, the Jakarta Globe daily on Tuesday quoted a senior government official as saying.

The government released a package of fiscal measures in August, when waning investor confidence in Indonesia was hammering its financial markets.

However, it has yet to make public details of some of those measures, including a promised new "negative investment list", setting out which areas are closed to foreign investment.

The rupiah has continued to fall and is now Asia's worst performing currency, having lost almost 17 percent of its value against the US dollar since the start of the year.

Analysts warn that when the US Federal Reserve does finally start its expected stimulus tapering, which was delayed in September, Indonesia could again see a rush funds leaving the country and even sharper falls in the rupiah.

"There will be a (new) regulation so that exports could be bigger while imports would be controlled," the newspaper quoted the head of the finance ministry's fiscal office, Bambang Brodjonegoro, as saying.

Some of the measures announced in August included an increase in luxury tax on certain imports and planned incentives for labour-intensive industries to prevent layoffs.

The current account deficit widened to 4.4 percent of gross domestic product (GDP) in the first half of the year.

The government will announce trade data at around 0330 GMT for August which should help indicate whether the current account deficit is narrowing.

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