2003 deficit widens on higher subsidy<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Minister of Finance Boediono said that the 2003 state budget
\ndeficit was expected to widen to 2 percent of gross domestic
\nproduct (GDP) due to rising expenditures and falling revenues.<\/p>\n
He told legislators during a budget hearing on Tuesday that
\nthe deficit would hover around Rp 35.1 trillion (about US$4.23
\nbillion), instead of the Rp 34.4 trillion as hoped for when last
\nyear's budget was being planned.<\/p>\n
The original target was 1.8 percent of GDP.<\/p>\n
Boediono said that the higher-than-expected deficit came as a
\nresult of higher full-year expenditures to Rp 372.9 trillion from
\nthe target of Rp 370.6 trillion, citing larger allocations for
\nsubsidies and provincial budget needs.<\/p>\n
"Oil subsidies for instance, will increase from Rp 13.2
\ntrillion to Rp 26 trillion, and so will the spending on
\nprovincial administrations, which is expected to reach Rp 118
\ntrillion instead of the initial target of Rp 116.9 trillion,"
\nBoediono said.<\/p>\n
Global developments, which saw international oil prices rise
\nsharply earlier this year, forced the government to make
\nadjustments as it had to pay more for subsidies for the fuel sold
\non the domestic market.<\/p>\n
While the government's spending was greater than the initial
\ntargeted amount, Boediono said that to make matters worse -- some
\nof the revenue targets had fallen short.<\/p>\n
Included in those revenue shortfalls were the privatization
\nprogram, foreign loans and taxes collected.<\/p>\n
While the privatization program is expected to bring only Rp
\n6.2 trillion in, down from the Rp 8 trillion target, there would
\nbe also a shortfall in tax revenues which had been earmarked at
\nRp 241.7 trillion, but will probably only reach Rp 235.9
\ntrillion.<\/p>\n
This was mainly the result of a mismatch between the
\nrealization and initial assumptions of the exchange rate and
\ninterest rate, which cut income taxes, value added taxes, and
\nland and building taxes. The lower interest rate, for instance,
\nhas caused a lower tax revenue from interest on bank time
\ndeposits.<\/p>\n
"It's the combination of those missed targets in the revenue
\nand expenditure side that push the deficit wider," Boediono
\nclaimed.<\/p>\n
Tuesday's hearing was the first in a series of hearings aimed
\nat the state budget and if it is feasible in light of the latest
\neconomic situation, both domestically and globally.<\/p>\n
Since the deficit will be greater than earlier expected, the
\ngovernment has set up some rescue measures to make sure it can
\nplug that deficit.<\/p>\n
To increase the deficit financing domestically, the government
\nis now planning to raise its bond issues this year, from Rp 7.7
\ntrillion to Rp 11.7 trillion. Since some Rp 2.7 trillion worth of
\nbonds have been issued so far, the government still needs to
\nissue another Rp 9 trillion worth of bonds before Dec. 31.<\/p>\n
Proceeds from the sale of assets under the Indonesia Bank
\nRestructuring Agency (IBRA) would likely be increased to Rp 21.3
\ntrillion from Rp 18 trillion, while allocations to buy back
\nmaturing bonds would be reduced from Rp 13.5 trillion to Rp 9.4
\ntrillion.<\/p>\n
So far this year, the government had bought back up to Rp 3.25
\ntrillion worth of maturing bonds.<\/p>\n
Elsewhere, as for other assumptions, the government remained
\nupbeat that all would remain achievable.<\/p>\n
More hearings will be held in the coming days to seek opinions
\non part of legislators on the government's planned 2003 budget
\nrevisions.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/2003-deficit-widens-on-higher-subsidy-1447893297",
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"sponsor": "Okusi Associates",
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