preventing dutch diseases - United Nations in Cambodia

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MINISTRY OF ENERGY AND MINERAL RESOURCESDIRECTORATE GENERAL OF OIL AND GASMarch 27, 2008Key Factors in Indonesia• Indonesian government was a coalition of diverse groups rather than a narrowpolitical party. This provided a vehicle for developing consensus, and reducedrivalries over how resources rents were to be spent.• The overwhelming rural character of the Indonesian economy made ruraldevelopment (poverty eleviation) policies a critical priority, the government ensuredthat significant investments reached the rural communities.• Prudent investments of oil revenues during the windfalls of 1974-1985. Thisfacilitated the growths of a tradable sector and stimulated export diversification. Bythe late 1980s, exports had diversified sufficiently to no longer be dependent on oilalone.• Industrial policies were reformed if they clashed with macro policy. Thegovernment promptly dismantled protectionist policies and reduced trade barriersduring the second half of the 1980s. Timely devaluations of the Rupiah preventedDutch Disease effects and improved the profitability of the tradable sector.• Oil production level as well as oil price was the major consideration of nationalbudget perforement.• Economic crisis in 1998 hampered oil contribution to national accounts, wind-fallprofit from oil price increased has phasing out by huge extra budget (subsidy) tosecuring domestic oil supply due to decreasing domestic power purchasing parity.SAFETY FIRST 14© DJ MIGAS 2008
MINISTRY OF ENERGY AND MINERAL RESOURCESDIRECTORATE GENERAL OF OIL AND GASMarch 27, 2008www.esdm.go.idwww.migas.esdm.go.idSAFETY FIRST 15© DJ MIGAS 2008
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preventing dutch diseases - United Nations in Cambodia

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