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Indonesia -- taming foreign fund managers

Whipsawed in the markets, Jakarta should mull ways to slow volatile financial flows

| Indonesia
The priority should be for stable flows rather than maximum inflows.   © Reuters

"A current-account deficit is not a sin" says Indonesia's Finance Minister Sri Mulyani Indrawati, "but we are punished just the same". The minister -- former professor, former top World Bank official -- makes a telling point.

In textbook economics, it makes good sense for countries like Indonesia to run a current-account deficit, funded by foreign capital inflows. Its saving rate, at well over 30% of gross domestic product, is high but this is not enough to fund all the viable investment opportunities.

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