Medan – It would be difficult for Indonesia to reach a 7 percent growth target in the next two years, a senior minister said on Saturday.

"It is impossible to reach such growth rate with present situation and a lagging world economy," Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said in a seminar organized by the North Sumatra University (USU).

Currently, the government has set a targeted growth rate of 4.8 percent and projected growth rates of 5.4 percent and 6 percent respectively for 2005 and 2006.

"Indonesia's economic development and performance have improved during the past three years and the government is starting to solve lingering economic problems," Dorodjatun said.

"One-third of our state budget has been spent on repaying our foreign debts in the past three years," he said.

Indonesia is in a difficult economic situation with its foreign debt amounting to more than US$60 billion and domestic debt at over Rp 660 trillion (US$71.7 billion).

Statistics show there are more than 40 million people living under the poverty line with some 10 million unemployed out of a total of 230 million people.

With about 2.5 million people entering the labor force every year, Indonesia requires at least a growth rate of 6 percent per year to soak up the unemployed as each 1 percent growth will only absorb about 400,000 workers.

However, the Indonesian economy has not grown much higher than about 4 percent a year since the 1997 economic crisis, with growth of 4.1 percent last year