© 2022 International Monetary Fund IMF Country Report No. 22/84 INDONESIA 2022 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; STAFF STATEMENT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR INDONESIA Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2022 Article IV consultation with Indonesia, the following documents have been released and are included in this package: • A Press Release summarizing the views of the Executive Board as expressed during its March 11, 2022 consideration of the staff report that concluded the Article IV consultation with Indonesia. • The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on March 11, 2022, following discussions that ended on January 24, 2022, with the officials of Indonesia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on February 22, 2022. • An Informational Annex prepared by the IMF staff. • A Staff Statement updating information on recent developments. • A Statement by the Executive Director for Indonesia. The documents listed below will be separately released. Selected Issues The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents. Copies of this report are available to the public from International Monetary Fund • Publication Services PO Box 92780 • Washington, D.C. 20090 Telephone: (202) 623-7430 • Fax: (202) 623-7201 E-mail: publications@imf.org Web: http://www.imf.org Price: $18.00 per printed copy International Monetary Fund Washington, D.C. March 2022 PR22/84 IMF Executive Board Concludes 2022 Article IV Consultation with Indonesia FOR IMMEDIATE RELEASE Washington, DC – March 11, 2022: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Indonesia. As elsewhere, the COVID-19 pandemic has led to tragic loss of life and triggered a major economic downturn in Indonesia. The authorities have responded with a bold and comprehensive, and well-coordinated policy package that has successfully maintained economic and financial stability. With the recovery underway, they have begun to withdraw the exceptional support measures. Nevertheless, the pandemic has caused scarring and reinf orced the need to tackle longstanding challenges, including a low revenue intake and shallow f inancial markets. The Indonesian economy is recovering at a brisk pace. The Delta variant surge slowed the economic recovery in mid-2021, but growth picked up in the fourth quarter and is expected to strengthen over 2022−23. IMF staff project GDP growth at 5.4 percent for 2022 and 6.0 percent in 2023, supported by favorable global commodity prices, easing restrictions on activity, continued policy support, and rising mobility and confidence as the vaccination program expands into more remote areas. Inf lation has remained lower than in other emerging and advanced economies, allowing Bank Indonesia (BI) to support the recovery through accommodative policies, and is expected to rise gradually within the inflation target range in 2022. The outlook is improving but the balance of risks remains tilted to the downside. Executive Board Assessment2 Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities for maintaining macroeconomic and financial stability despite the severe impact of the COVID-19 pandemic, helped by substantial policy buffers accumulated over years of strong macroeconomic performance. While the outlook is improving, the balance of risks remains tilted to the downside. As the recovery takes hold, Directors considered that it would be appropriate to gradually phase out the exceptional policy support deployed during the pandemic and encouraged the authorities to press ahead with structural reforms. Directors agreed that the authorities’ gradual withdrawal of fiscal policy support would be appropriate. They noted that restoring the pre-pandemic 3 percent of GDP budget deficit ceiling in 2023 will bolster the credibility and sustainability of the fiscal framework. Directors supported the authorities’ plans to develop a medium-term revenue strategy to finance high 1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A s taf f team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. 2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Exec utive D irectors , and this summary is transmitt