The International Monetary Fund (IMF) has said it will support Indonesia to implement further fiscal stimulus spending in 2010.
In an annual review issued on July 29, the IMF said increased spending, especially on infrastructure, was critical to sustaining Indonesia 's recovery.
According to the institution, Indonesian authorities should create the "fiscal space" for extra stimulus measures by boosting tax collection and cutting energy subsidies to help fund infrastructure and social spending.
The Southeast Asian country will expand by 3.5 percent this year, rising to 4.5 percent in 2010, the IMF forecast. The Indonesian gross domestic product (GDP) grew by 6.1 percent last year.
The IMF board applauded interest rate cuts of 275 basis points to 6.75 percent, and a 6-billion-USD fiscal stimulus package equal to about 1.4 percent of the GDP.
According to the IMF, the Southeast Asian country took "timely and appropriate" action to ease monetary policy last year but additional stimulus efforts should focus on fiscal policy.
The Indonesian government has optimistically predicted the country’s GDP will grow at 4.5 percent this year and 6 percent in 2010./.