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Indonesia: Emerging model for LDCs
JAKARTA, June 0: Indonesia. one of the poorest . nations on earth not so long ago, could be a showpiece for the developing world by 2000. the World Bank said in Its annual report on the country, says AFP.
At the end of the century, per capita Gross National Product (GNP) could exceed 1 ,OOO dollar, about 20 times more than the 50 dollar recorded in 1967, and nearly twice 199 I s figure of 570 dollar.
"This is a realistic goal." the confidential report obtained by AFP said. But for It to be attained Jakarta must grapple with more difficult issues in the 1990s than It faced over the past 25 years.
Indonesia st|ll has a long way to go to reach the ranks of Middle Income Countries, the nearly 200-pagc report said. The agenda is formidable and the effort required should not be underestimated.
"Indonesia is still classified as a poor country .... but it is now within striking distance of Joining the Middle-Income Countries."
The Bank said Indonesia needed to post annual growth
rates of five to six per cent to absorb Its growing labor force and raise living standards of all
"At the same time, there is a need to ensure the long run sustainability of economic progress and reduce Indonesia's large debt burden," It said.
At the end of last year Indonesia's foreign debt stood at 63.5 billion dollar, a 6.3 billion dollar increase over the year, the Bank said.
The country needs Investment to overcome "bottlenecks" In essential Infrastructure such as electricity, telecommunications and transport. it said.
The world's fourth most populated country with 180 million inhabitants posted real Gross Domestic Product growth of 6.8 per cent tn 1991 despite a drought. Real Gross Domestic Product grew 7.3 per cent in 1990.
Inflation persists, standing at 9.4 per cent in 1991 after recording a 7.9 per cent rise the previous year.
The growth in exports — excluding oil — was "encouraging" at 22 per cent in 1991-92 and swamped the
12 per cent Jump in imports.
Indonesia's current account deficit was 4.5 billion dollar, about 4.3 per cent of Gross National Product, compared with 3.7 billion dollar In 1990-91. The worsening external balance was blamed on sagging oil exports, an import splurge and debt repayments.
The report said Indonesia would need in the year to March 31 about 4.3 billion dollar in foreign aid.
The availability of these funds will be discussed during the first meeting of Indonesian donors presided aver by the World Bank, which will be held tn July tn Paris.
The World Bank predicted Indonesia would persist with high Interest rate policies.
Despite measures taken in 1991-92 to control foreign debt, the current account deficit is "too large", the Bank said.
The task In 1992-93 is to set the current account deficit oh a declining path to achieve a more sustainable level of about two per cent of GNP In the medium term, and to ease Inflationary pressures.