Mitigating the crisis?

Kompas today (3/12) reports that the government is preparing a mitigation scenario to anticipate the impact of the crisis of Eurozone on Indonesia. Good.

But some of the efforts listed in the newspaper might not be feasible. For example, budget absorption. The state budget aims a deficit of 2.1% this year. That translates into around IDR 150 trillion. The last updated data of government expenditure that I have shows by October the net spending totaled to positive IDR 4.8 trillion. Now we've entered December. I don't think the government can meet the deficit target - just like in the previous years.

Secondly, the news mentions about Chiang Mai Initiative Multilateralization. This is still a tall order. In the midst of the Lehman crisis, nobody could use it, due to small scale amount of fund and more importantly, the strict conditionality linked to IMF if you asked a bigger amount. Until CMIM is reformed further, it will not serve as a good shock cushion in the region. We still remember that Korea didn't get helped from Chiang Mai. They got it from US Fed.