Indonesia plans to use meetings between global finance ministers and central bank chiefs on the island of Bali this week to push for more clarity on the path of interest rates in advanced countries, the country’s central bank governor said.
Indonesia and some other emerging economies have been hit hard as investors cut their risk appetite for assets amid a rise in U.S. interest rates and an intensifying trade war between Beijing and Washington.
Indonesia, which is hosting the annual meetings of the International Monetary Fund and the World Bank Group, expects talks to cover rising U.S. interest rates, as well as the global trade war and its impact on emerging markets, Bank Indonesia governor Perry Warjiyo told a news conference.
“We will voice the interest of Indonesia in the context so that global economic recovery can be more balanced, there can be more clarity on the path of rising interest rates in advanced economies and a resolution for rising tension in global trade,” Warjiyo said.
He called for more policy coordination and harmonization between countries so that emerging markets can lead global growth alongside a recovery in the U.S. economy.
The Indonesian rupiah IDR=ID has weakened around 10 percent so far this year, touching its lowest in over 20 years on Monday at 15,245 to the dollar before recovering slightly.
Bank Indonesia has raised interest rates five times since mid-May, while the government has lifted import taxes and delayed infrastructure projects to curb imports. Authorities have said they are willing to accept slightly lower economic growth to stabilize the market.
Indonesian Finance Minister Sri Mulyani Indrawati, a former managing director of the World Bank, defended multilateral gatherings like the IMF-World Bank meetings and said they were a way for global policy makers to build understanding.
S&P cuts losses to end flat
“I don’t underestimate meetings like this, although it is often hard to communicate these things easily. But if we don’t participate and we don’t present our actual problems, each country will go in their own direction and this can create danger,” she said, speaking alongside Warjiyo.
“Each country basically cares for its own domestic problems before looking after the world’s, but if we communicate often, people will know that one country’s policy can have a spillover dimension.”
Re-disseminated by The Asian Banker from Reuters