Indonesia targets fiscal reform

President Susilo Bambang Yudhoyono AFP

Indonesia continues to delight its equity and bond investors. The country is achieving healthy economic growth while so many other economies are stagnating, and it is doing so without profligate government spending. But investor-friendly ratios can disguise institutional failings.

President Susilo Bambang Yudhoyono outlined his 2012 budget proposals to parliament on August 16, on the eve of the country’s 66th anniversary. The fiscal deficit is expected to drop to 1.5% of gross domestic product in 2012 from 2.1% of GDP in 2011, maintaining the trend of successive annual falls since 2004.

Wellian Wiranto,...