Burhanuddin Abdullah: Capitalizing on stability for sustained growth
Speech by Dr Burhanuddin Abdullah, Governor of Bank Indonesia, at the Annual Bankers' Dinner
2007, Jakarta, 12 January 2007.
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Assalamu'alaikum wr. wb,
Good evening and greetings to you all,
I. Introduction
In commencing my speech, I would like to invite you to join me in expressing thanks and praise to God
Almighty who has again blessed us with the chance to meet in this pleasant and congenial setting at
the Annual Bankers' Dinner 2007.
On this wonderful opportunity and on behalf of the Board of Governors of Bank Indonesia, please
allow me to wish you all a Happy New Year for 2007. May we all be blessed in every step that we
take.
Tonight marks the fourth time I stand at this prominent forum, in the presence of you, distinguished
ladies and gentlemen, to deliver the Governor of Bank Indonesia's start-of-year briefing. This also
suggests that it has been almost 4 (four) years since I was appointed to the position of Governor of
Bank Indonesia. Despite some shortcomings as well as successes, I would like to thank you all for
your support and cooperation that has been so forthcoming over the years.
II. Reflection of 2006 economic dynamics
A. Year 2006 - the year to restore stability
Distinguished guests,
The year 2006, which only passed a few days ago, was replete with splendid colours which I found
most impressive. To policymakers in Government, Parliament, and also Bank Indonesia, 2006 was a
year which finally provided some breathing space, albeit with several footnotes. To entrepreneurs,
2006 was a year of mixed achievements. Enterprises in the real sector, in the manufacturing industry
in particular, found 2006 a constrictive year. Competition pressures from more efficient and productive
countries were enormous. Notwithstanding, 2006 was a year that generated much profit for
participants in extractive industries, as reflected by the surging export level to countries that are our
primary trading partners. Nonetheless, to the majority of the general public, 2006 was a truly trying
year. It was a test of resilience and patience as a result of high inflation, which were direct and indirect
effects of fuel price hikes in the previous year. With all these episodes, phenomena and dynamics,
2006 was a year we should nevertheless be thankful for.
For that reason, at the beginning of my speech tonight, I would like to invite you all, distinguished
ladies and gentlemen, to compare notes and ask imperative questions regarding the intentions,
motivation, steps and achievements for the year that has just passed us by. What have we achieved
so far? What must we persevere within the coming year? What are our problems? Is it lack of hard
work? Sincerity? Determination? Or is it something else? We are asking such questions while looking
throughout the country and wondering where are we in the race to seek prosperity for all of our
people? Could we be left behind by our neighbouring countries?
In the following section I will explicate the targets, hopes and dreams we must knit together this
coming year, 2007. Inevitably, deep observation and sharp analysis are required on the numerous
predicaments and on the social and cultural order of society, which will become the foundation of
growth and development in our economy. Subsequently, towards the end of my speech I will present
some messages, follow-up steps and policy measures that will take place this coming year, under one
common goal, that is to make our economy a more prosperous one.
Distinguished guests,
The transition from 2005 is still fresh in our minds. We left 2005 full of hopes and concerns, because
we were convinced that at the earlier part of 2006 we would still see some difficulties as a result of
adverse external shocks, particularly the soaring global oil price. Nevertheless, hopes abounded
during the early part of 2006. We were optimistic, firstly, that macro economic stability would be
restored to its proper path and be maintained so that economic enthusiasm would return to where it
should be. Secondly, we also strived to achieve the first goals in order to quickly minimize the rigidities
and structural inefficiencies in our economy.
We should be grateful because we were able to maintain macroeconomic and financial system
stability during 2006. Numerous indicators which endured pressures in 2005 have shown positive
improvement in 2006. Relatively high inflationary pressures at the beginning of 2006 have gradually
dissipated throughout 2006. By the end of 2006, the inflation rate was recorded at 6.6% (y-o-y); below
the targeted rate of 8±1% set by the Government and Bank Indonesia. Success in controlling inflation
in 2006 also reveals that monetary policy was able to mitigate the second round effects of soaring
global oil prices at the end of 2005 on inflation expectations (See Graph 1)1.
Inflation stabilization in 2006 and relatively good performance in the balance of payments, with a
surplus of 3.7% of GDP, also contributed towards a stable rupiah exchange rate throughout 2006,
after significant depreciation in 2005. Entering 2006, exchange rate volatility had also decreased.
The year 2006 was also an important one as we settled our outstanding obligations to the IMF without
triggering significant turbulence in the market. With the debt now cleared, we are now a 'regular'
member of the IMF. Even though the outstanding obligations have been paid, our foreign exchange
reserves position was maintained at an acceptable level. This improved the confidence of market
players in the foreign exchange markets. Throughout 2006, the rupiah to US dollar exchange rate
tended to be stable at a level of Rp.9,100 - 9,400 per USD with relatively lower volatility than the
previous year (See Graph 2).
Towards the end of 2006, uncertainty regarding shocks in regional financial markets emerged as a
result of the Bank of Thailand's policy aimed at stemming the flow of short-term capital into its financial
system. Fortunately such fears never materialized. Although the rupiah fluctuated momentarily, it soon
stabilised in line with its external balance. The policy taken by Thailand was based on its domestic
considerations and economic interests. We also have our own considerations in formulating policies
that match our own particular circumstances and interests. In this case, Bank Indonesia believes that
the liberal capital account regime that has been implemented for many years remains congruent to our
wider national interests. The economic theory of Kydland and Prescott regarding time inconsistency in
employing a policy seems a relevant reference point with respect to the choice of policy regime which
we have instituted ex-ante. We cannot simply alter our capital account regime to become more closed
without precipitating a loss of credibility. Credibility, which we have strived painfully to achieve over the
years, should not be thrown away merely due to the temptation of temporary benefits.
With the above positive developments, Bank Indonesia found the opportunity to gradually reduce the
BI Rate during 2006. Throughout 2006, Bank Indonesia trimmed the BI Rate by 300 basis points,
which by end of 2006 was recorded below 2 (two) digits, namely 9.75%. Such reductions were taken
to preserve the positive market perceptions and support a more conducive business climate, while
safeguarding stability in the financial markets amid capital inflows for portfolio placements.
The regained macroeconomic stability provided opportunity for a broad-based economic recovery.
National economic expansion became visible in the second half of 2006, particularly in the growth of
production indicators, although insufficiently balanced due to a less-than-conducive investment climate
and the high-cost economy. Investment slowed compared to the previous year, and therefore made
exports and private consumption the primary base of economic growth. Furthermore, beginning in the
second half of 2006 we witnessed an upswing in credit growth, which was followed by acceleration in
government spending, and thus helping to boost economic growth. At the end of 2006, economic
growth was recorded at 5.5% y-o-y22.
The national banking industry has achieved a gradual marked improvement over the last three years.
Quantitatively, there has been a significant upswing across various financial performance indicators
and banking industry activity. This was underpinned by growth in total assets, which was bolstered by
a build-up in earning assets, including credit (See Graph 3). As of November, total assets in the
banking industry had risen to Rp.1,635 trillion, whereas credit portfolio rose by Rp.78,2 trillion (10.7%).
This was funded by growth in deposits to the tune of Rp.123 trillion (10.9%). Banking capital was also
maintained at a level deemed more than adequate, as reflected by the Capital Adequacy Ratio (CAR)
which was maintained at the relatively high level of 20%.
Meanwhile, the level of Non-Performing Loans (NPL) in the industry has taken a significant dive, which
indicates that, essentially, the prevailing condition of the banking industry has experienced a marked
and continual improvement. It should be noted that the current level of NPL in the banking industry is
heavily influenced by the NPL of state-owned banks, which still carry some long-standing problems
from the past.
Qualitatively, the health and resilience of the banking industry over the last few years have also
witnessed significant improvements. The human resources capacity within the banking industry has
increased, along with the enhanced understanding of prudential concepts and risk management
throughout the banks' organization hierarchies. The management information system, internal control
system, risk-management system, good governance and all operational procedures that follow; have
generally strengthened. The quality of the banking service is also a crucial factor for which progress is
managed through the creation of a trusted customer protection system.
In the capital markets, the price of bank shares experienced a rather significant hike before finally
stabilizing. Bank issued bonds also received a positive response from the market at an acceptable
price. Deposits at banks steadily accrued year by year reaching 10% annually despite a continuous fall
in the savings' interest rate, following cuts in the BI Rate. This could be considered as a strong
indication that public confidence in the banking industry has recovered and even grown. Alterations to
the Bank Deposit Guarantee Scheme, implemented in the latter part of last year, were performed
smoothly and without triggering turbulence that could threaten overall financial system stability.
Concerns regarding flight-to-safety and flight-to-quality from the customers of small banks, as a result
of changes in the blanket guarantee scheme to a limited guarantee scheme instituted by the Deposit
Insurance Corporation (LPS) have proved not to materialise, or at least minimised.
Meanwhile, the Rural Bank (BPR) industry has also shown growth. This industry plays an important
role in developing Small and Micro Enterprises (Graph 4), and communities of villages and suburbs.
There are currently 1,935 Rural Banks with 3,157 bank offices with a credit portfolio reaching Rp.16,9
trillion (Table 1). As the nominal amount of credit is usually small, to reach a particular amount of
credits extended, Rural Banks will have a much higher client ratio compared to that of Commercial
Banks.
Table 1.
Performance of Rural Banks
Ladies and Gentlemen,
Speaking about the development of the financial industry, and the banking industry to be more
specific, four years ago, we clearly realized that banking industry supervision and regulation must be
based on a long-term vision in its achievement strategy, and such a vision must be approached
through systematic and measurable efforts.
Therefore, at the beginning of 2004, Bank Indonesia issued Indonesian Banking Architecture (API), a
blueprint of upcoming banking industry guidelines, and the kind of vision, direction and form to be
achieved. The holistic policies that Bank Indonesia issue to achieve such goals up until the end of
API
2010 are included as part of the policy structure.
Since then, as our distinguished guests may observe, Bank Indonesia has continuously strived to
manage and improve all aspects of banking activities. Each regulation, from strategic ones to the
technical guidelines of operational courses of action, was designed to be a torch to light the darkness
and lead the way. Steadily, albeit sometimes slowly, the national banking industry has achieved good
progress and alleviated many of its problems. The pillars set forth in the Indonesian Banking
Architecture have begun to transform into pillars of banking industry strengths, promoting greater
stability.
Through the implementation of good corporate governance (GCG), the most recent Bank Indonesia
survey suggested that nearly all banks have conducted self-assessments. The results of the
self-assessments concluded that approximately 98% of banks in Indonesia have applied a minimum of
50% of the GCG principles, as mandated by PBI 8/4/PBI/2006 regarding GCG Implementation for
Commercial Banks. Management information systems, internal control systems, risk management
systems, and all operational procedures that follow, have generally progressed, however, there
remains room for improvement.
As another step to greater ensure that good governance in the banking industry is upheld, in 2006 we
took a step which we deem to be strategic. A step that we believe may help rebuild a good image and
erase any negative perceptions that abound within the Indonesian financial system which can be
exploited for illegal activities, such as money laundering. The step taken is the cooperation with
various law enforcement authorities - The Indonesian Police, the Attorney General, The Indonesian
Financial Transaction Reports and Analysis Centre (PPATK) - and most recently the Corruption
Eradication Commission (KPK).
The aforementioned cooperation between Bank Indonesia and the various law enforcement
institutions is hoped to be able to clear any misperceptions regarding to coordination efforts in
handling various banking crimes, including corruption. Perception, understanding, competence and
the work ethic in dealing with multiple banking problems will be settled through a performance
structure that is prompt, objective and proportionate. Therefore, it is expected that public confidence,
as the foundation of banking business, can be safeguarded and continually improved since it is
guaranteed by a trustworthy law enforcement system.
As a result of our relentless endeavours, the dark cloud that has overshadowed the national banking
industry for so long has begun to disperse little by little. We should also reinforce our pledge and
commitment, as well as find the faith that we will, in time, accomplish our ultimate goal: "the
establishment of a sound, strong, beneficial and rewarding national banking industry".
B. Several problems in 2006
Ladies and Gentlemen,
Based on my previous comments, it would not be excessive to say that there have been numerous
successes achieved during 2006. We have successfully enticed our economic machines back on the
proper track. We have reduced the cost of financing, which was the direct result of high inflation. We
have reiterated that the economic management of our country will only succeed if it is us, ladies and
gentlemen, who do it. However, against this backdrop, we also comprehend how serious our perennial
carry-over problems have become, which we have shouldered year after year. That is the structural
rigidities within our economy, which in turn has paved the way for inefficiency, squandering time and
resources in the form of excess liquidity and unemployment, and abject poverty that continues to
worsen.
Meanwhile, the condition of the real sector, which forms the spine of the country, is faced with an
inevitable paradoxical phenomenon. The growth and expansion of economic capacity that took place
over the last few years tended to favour capital intensive sectors rather than labour intensive ones.
Unemployment continues to grow despite a prospective economy. Lately, we have also observed the
exacerbation of poverty. Graphs 5 and 6 provide an illustration of the paradox of growth phenomenon.
There is a suggestion that such paradox of growth occurs due to structural imbalances in the
Indonesian economy. Distortions caused by imperfect market structure and the presence of
oligopolystic industries, which were legacies of Indonesia's economy history, have caused the
economy to work only sub-optimally and restrain the market's ability to allocate resources efficiently.
Such distortions limit access and broader participation in economic activities. This situation has been
present for too long and thus making it easy for us to forget to address it. We must now immediately
open the doors of access and invite broader participation in the economy through improvements in
investment climate, licence process simplifications, and other improvements. I believe that we all
understand that it is only through these means we can achieve high quality growth, which in turn will
resolve the large income gap issue.
From this argument, it is clear that improving investment climate, opening easier access and broader
participation in the economy are important factors in post-crisis economic recovery. Meanwhile, it has
been found by non-governmental institutions such as LPEM UI and ADB that there remain many
constraints to investment. The development of these constraints in the recent year hints us that the
investment climate has yet to improve on a general level. Moreover, referring to the most recent
survey results, illustrated on Graph 7, some of the constraints have followed an increasing trend, such
as uncertainty surrounding economic policies and regulations; corruption; taxation related matters; the
skills and education of human resources; infrastructure, particularly electricity and public transport; a
poor legal system and protracted conflict resolution; as well as cost of financing. In connection to these
survey results, we can also observe that the revision of Taxation Law; Labour Law; Customs Law;
Investment Law; infrastructure improvement and future energy security; legal certainty; and the
harmonisation of regulations between central and regional governments, were regarded by both
domestic as well as international investors as constraints to investment activities in 2006.
As a result of the above, investors and the banking industry; be they domestic or international,
perceive the presence of high micro-structural risks in our real sectors. This is why only minimal
interest abounds in long-term investments, as shown by the low growth of Foreign Direct Investment
(FDI) to Indonesia in the post-crisis era, despite the very high FDI potential of other countries in the
Asian region at the moment.
Compared to other countries in the Asian region, the micro risk and distortions prevalent in the real
sector have contributed to lower efficiency and productivity in the Indonesian economy. IMD survey
results published in the World Competitiveness Report 2006 show that, based on economic
performance, government efficiency, business environment efficiency and the infrastructure in
Indonesia, our country is positioned at 60th out of 61 countries (See Table 2). Meanwhile, a World
Bank survey on investment supporting factors shows that Indonesia has dropped to 135th place in
2006; from 131st in the previous year.
The tribulations I have just mentioned, compounded by the passage of time, have caused a slower
accumulation of capital, reflected by a stagnant investment growth, and a contraction in the share of
investment in GDP (See Graph 8a), as well as a significant reduction in the quality of capital in the
economy (See Graph 8b). The downside of such low accumulation and quality of capital is reflected by
the phenomenon of supply side rigidity in the post-crisis economy. Such a case is illustrated in Graph
9, which shows a steeper slope in the dynamics of price and output in Indonesia in the post-crisis era.
The supply side rigidity in the post-crisis economy has in turn triggered the low absorption of labour
and reduced the speed of economic growth (See Graph 10). These last two aspects clearly pave the
way to wide-reaching social and economic effects: Our poverty level has risen along with widening
socio-economic inequalities (See Table 3).
From a different perspective, micro risk and economic distortions, which curb investment, are also
reflected by the decoupling of the financial and real sectors. Banks become reluctant to distribute
SBI
funds to the real sector and tend to place their funds in low risk financial instruments, such as and
SUN. Bank funding to the real sector significantly drops and we are then left facing a liquidity overhang
in the form of outstanding SBI, which currently amounts to slightly above Rp.200 trillion, forcing an
imbalanced economic growth. Our economy only grows with one engine. We are flying with only one
engine! The real sector tends to move slowly since micro-structural risk impedes on banking
intermediation, whereas the financial sector continues to expand due to the constancy of funds
invested into it. Such conditions are very unhealthy to our economic system as a whole if they persist.
In addition, micro risk and the structural distortions in the economy, which trigger supply side rigidity,
have caused the economy to be more vulnerable to external shocks and inflationary pressures. Our
core inflation rate has remained persistent. This constraint has surely affected the funding interest rate
in the economy as a whole, which tends to be relatively high. This series of events have caused
collective suffering for all. By looking deeper to see who will suffer the most from such situation, we
can all agree that it is not morally justified. My whole argument is to reaffirm that corrections to
structural distortions and improvements in investment climate are the primary determining factors of
the interest rate's ability to slide naturally, whilst maintaining stability. It is through these means that a
sustainable development may be realized.
Distinguished guests,
Prevailing conditions combined with our turbulent economy, noted or not, will continue to aggravate
other problems in social, political and cultural life. I have noted some of the disarray in public social life
that tends to prioritize the interests of a limited group compared to broader national interests.
Consensus and commitment, which we have all agreed upon, are barely felt. Many of us move
towards self-interest fulfilment and it is, therefore, very difficult to connect with one another to achieve
our national interests. More than ever we require a common thread that can unite us as a unified
country. In terms of global relations, upon seeing other countries marching forward, concern,
powerlessness and a sense of alienation abound. We praise and study their successes, nevertheless
we remain unable to match their lead.
Meanwhile, violent culture, self-centred social conduct, regressive ideas, extremism, intolerance and a
terrible work ethic are becoming the bread and butter of this nation. Political developments in the
post-crisis era have only provided a minimal level of valid rewards that could possibly affect public
prosperity. Democracy, which we have adopted as the cornerstone of development, remains primarily
out of reach and unable to optimise the greater interest of our nation.
These inauspicious events, which I have briefly outlined today, unfortunately have been made even
worse, marked by a series of natural disasters that ripped at the heart of our beloved country. Another
disaster seems to strike and rub salt in our wounds while we are still mourning and trying to recover
from the one before. Earthquakes, tsunamis, long droughts, bush fires, a mud volcano, and the most
recent floods and landslides, all struck in succession at different regions of the nation. The economy of
the victims in the disaster areas is extremely constricted despite all the aid that has poured in. We at
Bank Indonesia have asked the banking industry to provide special allowance for credits to business
enterprises throughout the nation that are affected by the disaster. We hope that this will further assist
them with the establishment and reconstruction of their business ventures. Regrettably, this step
remains far from adequate.
Against this abhorrent backdrop, the public urgently requires a united front from all of the nation's
components to share concern and hope. We all feel troubled by the crises we are facing. We need a
political and cultural strategy to restore the nation's consensus and commitment, awaken the sense of
importance, eliminate the feeling of being alienated, and become more receptive towards hope. For
this reason, we, distinguished ladies and gentlemen, should be able to demonstrate to the public that
we are performing to our fullest capacity, be it as the regulatory authority, banking, the business world,
mass media, or any other key role, all in the interest of the affected masses. We must unite, help one
another, and work much harder to overcome our economic pitfalls. Only by doing so will the very real
hope of improvements in all aspects of our nation's life be established.
Regarding to economic issues we face, I am sure that we can all agree that coordination and
cooperation with various other institutions which have the authority, expertise, and appropriate policy
instruments will be instrumental in resolving those issues. It is clear that monetary and banking
policies cannot resolve various structural problems related with unfavourable investment climate and
distortions in the goods and services market which in turn cause high costs in the economy. Bank
Indonesia, as the monetary and banking authority, has limitations in its tasks and its policy
instrument's scope of reach.
In accordance with the mandate given by the Law, Bank Indonesia can only contribute to the nation
through its efforts in maintaining macroeconomic and financial system stability. Still, the achievement
of such a mandate will largely depend on coordination with other authorities, cooperation with various
parties, and the help and support of various stakeholders. We do realize that there remain many
weaknesses in the area of banking supervision, even though today's banking industry is much
sounder, stronger and more profitable compared to several years ago.
III. Economic outlook for 2007
A. 2007 - a defining moment
Ladies and Gentlemen,
With respect to the overall condition and dynamics of the economy in 2006, it would not be excessive
to say that 2007 is a defining moment: the year when capitalizing on macroeconomic stability to
generate greater optimism for the lasting recovery of our nation's economy becomes essential.
In this defining moment, the journey of development for our country is entering a critical phase.
Everything that we achieved back in 2006 has led us towards the middle of a bridge of hope, which we
should immediately cross by expending our every effort and wholeheartedness but while exercising
caution at all times. If we are able to keep pacing forward and safely across that bridge, then the hope
of a better future will open wide before us. However, if we are forced to halt because of our uncertainty
or loss of direction, then the proverbial bridge will crumble beneath us due to the excessive burden
that we carry. We would drop back to square one and would, in fact, then face an even higher
mountain to climb.
Entering 2007 means that we are entering the 10th (tenth) year since we were hit by the
multidimensional crisis that so devastated all aspects of our nation's life. 10 (ten) years is a lengthy period
of time for a nation to recover. We need to tell ourselves that enough is enough! Delay will only
continue to marginalise and alienate our great nation in the ever increasing pace of globalization era;
filled with stiffer competition between countries. Delay will crush us in time. There's only one way for
us to resolve our problems. If you want to have a prosperous life, work hard! There's no substitute for
a hard work. Hard work towards self-improvement is a sufficient condition on the road to better future.
Therefore, 2007 is the perfect time for us to work harder with better focus and greater commitment. It
is now time to act because inaction can be fatal!
In the midst of World War II, under extreme pressure, Sir Winston Churchill once said "We shall
prevail". This phrase is relevant to our condition at the moment. There will not be any chance of losing
sight of the prize if we grab tightly with both hands our spirit, faith and hope. The crisis ten years ago
may have almost severed most of our life lines, but it could not extinguish our hopes for the future of
our nation. Never have we surrendered to any predicament in the history of our nation. We have
always risen from the depths to fight for our dignity and pride as a sovereign nation.
From Bank Indonesia's perspective, the macroeconomic condition in 2007 is expected to remain
stable and will become the primary foundation to achieve higher growth, provided that micro risk
factors and distortions in the real sector can be minimized and the investment climate improves
significantly.
Economic growth in 2007 is projected to reach 6.0% (within a range of 5.7%-6.3%), which surpasses
economic growth in 2005 and 2006. In the first semester of 2007, the main thrust of economic growth
will stem from consumption with some assistance from private investment. Such a rise in consumption
will be fostered by an upswing in public purchasing power as a result of the plan to raise the salary of
civil servants and the regional minimum wage early in the first semester of 2007 and to maintain
inflation at a low targeted rate. Economic growth is projected to be even more robust in the second
semester of 2007 along with significant improvements in private investment and greater government
capital expenditure. The expected increase in private investment will be encouraged by greater
confidence among economic agents regarding improved economic prospects, but also by the positive
effects brought about by a slide in both the inflation and interest rates, on top of a stable exchange
rate.
Externally, exports are projected to grow steadily but remain stunted due to global economic growth,
which is not as buoyant as during 2006. On the other hand, imports of goods and services are
projected to rise along with a surge in domestic demand. Judging by the most recent export growth
figures, which are primarily attributable to natural resource commodities, the falling trend in the prices
of global commodities is projected to be offset by export of manufactured goods, as investment climate
improves. A number of commodities are expected to provide the largest contribution; including textiles,
electrical appliances, chemical products and machinery.
The balance of payments in 2007 is expected to record a surplus, although not as large as the surplus
in 2006 (See Table 4). The smaller surplus is attributable to an increase in import demand along with a
boost in economic activities. According to our projection, the current account balance for 2007 will
reach a surplus of 1,87% of GDP. As per the projected balance of payments, foreign exchange
reserves in 2007 are expected to be around US$47 billion. The surplus in the balance of payments,
the increase in foreign exchange reserves and market confidence in the quality of macroeconomic
policy management will, in turn, support the stability of the rupiah exchange rate in 2007, which is
projected to move in line with the external balance.
Greater economic activity in 2007 is not expected to add excessive pressure on prices, in general, so
that CPI inflation is expected to remain within the target range set forth by the government, namely 6%
±1%. The growth in demand is expected to be offset by improvements in supply as investment climate
improves and, as such, is not anticipated to heap more pressure onto core inflation. Projected CPI
inflation in 2007 is also supported by the preserved inflation expectations of market players (See
consensus forecast in Graph 11) and low upward pressure on administered prices along with the
scrapped government plan to hike the prices of strategic administered groups of goods. In addition,
inflati