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By Stefanno Sulaiman
JAKARTA (Reuters) -Indonesian officials will seek to address concerns among investors and other key economic players about an economic downturn in Southeast Asia's biggest economy following a stock market selloff and currency slump, an official said on Thursday.
President Prabowo Subianto will meet with investors and others following the long Eid-al-Fitr holiday, which begins on Friday, aiming to correct misperceptions about the government's policies, said Raden Pardede, a special aide to Indonesia's senior economic minister Airlangga Hartarto.
"The government will improve and intensify communication with economic players," Raden told Reuters.
The rupiah has fallen to its weakest since 1998, following a slide of as much as 7.1% in the main stock index last week, pressured by concerns over government policy, the country's fiscal position and its growth prospects.
Analysts mentioned poor government communication on fiscal policies and strategies to achieve growth as one of the selloff triggers, in addition to pressure on the market from negative global sentiment.
Key messages will include assurances that the government will not break the legal fiscal deficit ceiling at 3% of GDP and there will be no political interference in the newly set up sovereign wealth fund Danantara Indonesia, Raden said.
"We are also preparing ways to deregulate the real sector, mainly to encourage the manufacturing industry, which creates jobs and is export-oriented," he said referring to a policy that seeks to make available 20 trillion rupiah ($1.21 billion) in credit for labour-intensive industries.
The government and financial authorities will also provide more investment instruments to attract investors and will ensure the quality of companies listed on the stock exchange, finance ministry spokesperson Deni Surjantoro told Reuters.
Bank Indonesia said it is ready to continue its intervention to stabilise the currency, but said economic indicators show the country is fundamentally strong and the situation is "totally different" from 1998 financial crisis.
On Thursday, the rupiah strengthened as much as 0.24% against the dollar. It has rebounded since Wednesday with BI citing positive sentiment in stocks, bonds and FX markets. The current level at around 16,500 is still near 1998's level of 16,800.
After stocks tumbled last week, the financial regulator eased buyback processes, and the market has since recovered.
"Markets will keep an eye on the mid-year budget update to gauge if the shortfall in revenues has narrowed or further spending rationalisation is required to keep within the 3% of GDP deficit threshold," DBS Bank economist Radhika Rao said in an e-mail.
The mid-year budget update is usually handed down in early July.
Rao said a long holiday will provide a break to the market, which will be shut from March 28 to April 7.
($1 = 16,545.0000 rupiah)
(Reporting by Stefanno Sulaiman; Editing by Gibran Peshimam and Sonali Paul)
