Guy J.
Pauker
IN MACRO-ECONOMIC TERMS 1980 was a
good year for Indonesia. Foreign exchange reserves
amounted to at least
$7.2 billion. The Indonesian government
could obtain commercial
loans on the international market
at a rate
of interest only
0.5% above the London interbank rate. Following
the Bali meeting of
OPEC, held in mid
December, the base price of Indonesia's
most popular grade of oil, Minas crude, was increased to $35 a barrel, to which surcharges are being
added for part of the
volume sold. Ten
years ago the
same oil sold for
$1.70 a barrel. Although
Indonesia remains the world's
major rice importer because per capita consumption continues to increase, in 1980 production reached a record 20 million
tons of husked
rice, about 10% more than in the previous year. After considerable
hesitation and internal debate,
the Indonesian government raised substantially the highly subsidized price of domestic fuels without
suffering the adverse
political effects some
internal security agencies had
feared.
The next few years promise to
favor sustained economic development, although Resources transfers from abroad
will still be needed, especially if net oil export earnings decline Rafter 1985
because of reduced production and
increased domestic consumption. A World Bank mission reported in February 1980 that, according to its projections, Indonesia's foreign exchange revenue from oil and LNG will amount to $17 billion in 1985 and earnings from other exports to an additional $14 billion, estimates which are probably low in view of recent and future price increases for oil and gas.
Unlike other exporters of petroleum who have been using their unexpected affluence to finance economically unsound development schemes and to buy sophisticated weapons in excess of their security needs and their technological capabilities, the Indonesian government.........
