JAKARTA - South-east Asia's biggest economy can expect strong growth of 6.2 per cent next year despite a global outlook 'wrought with challenges', Indonesian President Susilo Bambang Yudhoyono said on Friday.

Unveiling the 2009 draft national budget, Mr Yudhoyono said Indonesia would be able to further its economic transformation while bringing inflation under control and spending more on high civil service salaries and education.

'From its dismal condition 10 years ago, Indonesia has transformed today into a dynamic national full of hope,' he told lawmakers in a major address two days before the country celebrates its independence day'.

'However despite all this our nation continues to be impacted by a number of serious trials... The price of oil has reached the highest level in history'.

'The price of food all over the world has drastically soared'. The budget predicts economic growth of 6.2 per cent with inflation at around 6.5 per cent, well down from its current peaks around 12 per cent after hikes in subsidised fuel prices and the surge in commodity prices this year.

Expenditure is expected to rise 13.4 per cent to 1,222 trillion rupiah (S$188 billion dollars), while revenue is expected to jump 14.3 per cent to just over 1,000 trillion rupiah, the president said in a speech to parliament.

The government expects a budget deficit of 1.9 per cent of gross domestic product compared with the 1.5-1.8 per cent expected this year, Mr Yudhoyono said.

'The budget for education has risen to almost double from 78.5 trillion rupiah in 2005 to 154.2 trillion in 2008', he said.

'In fact, for the 2009 budget, in the midst of the global oil and food price crisis that has adversely impacted our economy, we have been able to meet the 20 per cent of the state budget requirement for education as mandated by the constitution'.

The wider deficit expectation stems partly from a proposal to increase civil-servant salaries by 15 per cent on average, and the increase in education expenditure to 20 per cent of government spending from around 15 per cent this year.

The budget allocation in 2009 would be geared toward stimulating growth, expanding employment opportunities and alleviating poverty, the president said. -- AFP