Rupiah’s slump puts $25bn power projects on hold

Bloomberg

Indonesia plans to delay $25 billion worth of power projects as it seeks to rein in a widening current-account deficit and a selloff in the nation’s currency.
The government will delay almost half of the planned 35 gigawatts of electricity projects as it wants to ease pressure on imports, Energy and Mineral Resources Minister Ignasius Jonan told reporters in Jakarta. The deferment may help reduce imports of about $8 billion to $10 billion, he said.
President Joko Widodo’s government is intensifying efforts to guard the rupiah, which is heading toward 15,000 to the dollar last seen during the Asian financial crisis two decades ago. Bank Indonesia has adopted a number of measures to improve liquidity and authorities said they will clamp down on speculation in the foreign-exchange market to curb volatility.
“Power projects yet to achieve financing will be delayed as we want to reduce unnecessary imports,” Jonan said. The government also wants projects in the energy and mineral sectors to use local products as much as possible, he said.
A current-account deficit of 3 percent of gross domestic product and foreign ownership of about 40 percent of government bonds have left Indonesia exposed to the selloff sweeping across emerging markets as US interest rates rise.
The government will focus on boosting investment and exports to tackle the deficit, Widodo told reporters in Jakarta. The decline in rupiah is due to external factors and the government will coordinate with the fiscal, monetary, industrial and business sectors to ensure the nation’s economic stability, his office said in a statement.