Thursday, February 26, 2009

Stimulus for works

The GOI claims that its Rp 73.3 trillion stimulus will create 3m employment, assuming an employment-growth elasticity of between 431 and 450 thousands (The Jakarta Post, 26/2/2009). It seems that GOI expects workers to come to its infrastructre projects that will take Rp 12.2 tr from the stimulus, on top of the Rp 90 tr already allocated in the 2009 state budget. With all this, GOI expects to see a poverty redux from 15.4% last year to 12-13% this year, assuming growth between 4.5 and 5%.

Two notes. First, growth will likely be at 4% and that means employment and poverty targets might be missed. Second, setting targets is one thing, attempting to reach them is quite another. GOI has set so many targets but it is seldom crystal clear how they will achieve them. For one, infrastructure is said to be the champion, but at the same time populist moves such as fuel subsidy increase keeps coming. Also, arguably under DPR's resistance, GOI can't implement more effective modes for stimulus such as direct cash transfer.

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