No.7/ 95 /PSHM/Humas

The Governor of Bank Indonesia in G20 Conference Held in China: Indonesia Will be Able to Minimize the Impact of Price Increases in International Oil

"By the recent implementation of various fiscal and monetary policies to overcome the uncertainty of global economic condition, I feel optimistic about our ability to minimize the negative impact of the increasing prices of international oil and global imbalance on Indonesia economy", said the Governor of Bank Indonesia, Burhanuddin Abdullah in front of the Conference of Ministers of Finance and Governors of Central Banks of G20 Member Countries held in Epoch City, China on October 15-16, 2005. During the seventh meeting of G20 Conference opened by the President of China HU Juanto, the Governor of Bank Indonesia, whose presence accompanied by the Minister of Finance of the Republic of Indonesia Jusuf Anwar, implored all parties to join the effort to increase the stability of world oil price through market efficiency improvement by lessening market speculation, increasing investment in oil and gas sectors, energy saving, and policies created to reduce the impact of escalating international oil prices on domestic economy.

The conference having a theme of "Global Cooperation: Promoting Balanced and Orderly World Economic Development" discussed the condition and challenges in global economy while also covered several important issues such as the reform agenda of Bretton Woods institutions (IMF and World Bank), alternatives for development funding mechanism, framework for continuous development, and issues on demography and migration.

Joint Communiqué
In the joint communiqué announced at the end of the conference on October 16, 2005, the Ministers of Finance and Governors of Central Banks agreed that the ever lasting world economic expansion is facing the challenges of volatility and high oil prices, the more imbalance global condition, and increasing sentiment for protectionism, which can heighten the level of uncertainty and endanger the global economy.

Concerning this, G20 has agreed to implement the necessary policies to tackle the problems, whether by applying the policies on structural adjustment or policies on fiscal, monetary and exchange rates. Regarding international oil, country members of G20 have agreed to strengthen the cooperation to increase product capacity and refinery, strengthen communication between producers and customers, and improve market efficiency so that speculations in the international oil market can be weaken.

In this occasion, the Governor of BI also explained the result of the discussion of Bretton Wood Institutions (BWI) reform agenda that underlined the importance of creating changes in quota, votes, and representation that can be more accommodative to the changing constellation of global economy which is in line with the increasing economic segment of the emerging market. Furthermore, G20 encouraged BWI to review the missions, strategic reform directions, and road maps of the two multilateral institutions in order to give respond to the current changes and anticipate future changes.

Indonesian Policy
In the conference attended by prominent figures of the international finance sector such as Alan Greenspan (Chairman The Federal Reserve, USA) , Jean-Claude Trichet (European Central Bank), Gordon Brown (Bank of England, England), Rodrigo deRato (Managing Director IMF) and Paul Wolfowitz (World Bank), the Governor of BI and the Minister of Finance also clarified the latest economic condition in Indonesia and the policies taken to accelerate a continuous economic growth. Through various fiscal and monetary policies taken recently to overcome the uncertainty of global economy, the leader of Indonesian delegation was optimistic about minimizing the negative effects of the rising prices of international oil and global imbalance.

During the same occasion, the Governor of BI emphasized also Indonesia's plan to focus their efforts on improving the government loan management, stabilizing the financial market, overcoming governance issues and creating access improvement for small economic sectors and Micro, Small and Medium Business Enterprises (UMKM) to financial sectors.

Besides attending G20 Conference, the Governor of Bank Indonesia would be signing the Bilateral Swap Agreement (BSA) with Peoples Bank of China (Central Bank of China) on Monday October 17, 2005.

Representing 90% of the World's GDP
G20 is a highly influential forum, with country members of the highest GDP, both from developed and developing countries, namely the county members of G8 and China, Indonesia, India, Korea, Brazil, Mexico, South Africa, Turkey, Saudi Arabia, Argentina, and Australia. Measured by the population, G20 country members have represented two third of the world's population, and their production is 90% of the world's GDP, and based on foreign trade, they covered 80% of the total world trade. Therefore, the Governor of Bank Indonesia underlined the strategic meaning of Indonesia in attending such forum because not only would we be able to give voice to the interest of Indonesia's economy, but also to voice the aspiration of other developing countries.

Jakarta, October 16, 2005
Public Relation Bureau

Rizal A.Djaafara
Head of Bureau