Annual budget unveiled today<\/p>\n
JAKARTA (JP): President Soeharto is scheduled to propose the
\n1997\/1998 state budget to the House of Representatives today, a
\nbudget most analysts expect to remain austere.<\/p>\n
Analysts agree that the draft budget would not increase
\nsubstantially from the current budget of Rp 90.6 trillion (US$38
\nbillion).<\/p>\n
They contended that the government would continue to tighten
\npublic liquidity in a bid to cool down economic overheating.<\/p>\n
Economic overheating is still looming, with widening current
\naccount deficits and high inflation rates still haunting the
\ncountry's macroeconomic management.<\/p>\n
The expected small increase in the draft budget for the next
\nfiscal year will most likely be able to stimulate private sector
\ninvestment and to maintain economic growth of over 7.1 percent
\nper annum.<\/p>\n
The President said in his New Year's address that the
\neconomy's growth declined to 7.8 percent last year, from 8.2
\npercent recorded in 1995.<\/p>\n
He said the government's efforts to cool down the overheated
\neconomy would push down the inflation rate to 6.7 percent, from
\n8.6 percent in 1995.<\/p>\n
This year, Soeharto said, would challenge the government and
\nthe private sector alike to achieve high growth without causing
\noverheating. He argued that the world economic situation this
\nyear was full of uncertainties.<\/p>\n
To achieve high but sustainable growth, all four factions at
\nthe House of Representatives proposed late last year that the
\ngovernment raise the 1997\/1998 budget by 13 percent over this
\nfiscal year's budget to Rp 102 trillion.<\/p>\n
The current budget, which balances at Rp 90.6 trillion,
\nrepresents a 16.1 percent increase over the previous budget of Rp
\n78.02 trillion.<\/p>\n
The four factions -- the Armed Forces, Golkar, the United
\nDevelopment Party and the Indonesian Democratic Party -- used
\nsimilar assumptions: oil prices remaining at their current
\nlevels, continuing inflow of official foreign loans and steadily
\nincreasing tax revenues.<\/p>\n
The Armed Forces faction, for instance, projected that
\nIndonesia's crude oil prices would average $16.5 a barrel next
\nfiscal year, receipts from official foreign loans would reach Rp
\n13.4 trillion and tax revenues would rise 12 percent from the
\ncurrent budget target of Rp 55.99 trillion.<\/p>\n
The faction proposed the 1997\/1998 budget should be 14.5
\npercent larger, at Rp 103 trillion, than the current budget.<\/p>\n
The Golkar faction predicted the government's domestic revenue
\nfrom oil and gas would increase slightly to Rp 15 trillion for
\nthe next financial year, from Rp 14.1 trillion for the current
\nbudget.<\/p>\n
The faction projected domestic revenues from non-oil and gas
\nsectors, including tax and non-tax income, would reach Rp 75.6
\ntrillion, up from Rp 64.08 trillion for the current budget.<\/p>\n
It proposed the 1997\/1998 budget should balance at Rp 102.3
\ntrillion. The proposed budget increase was to augment the
\ngovernment's increasing routine spending.<\/p>\n
Golkar's chairman, Harmoko, said in Bali last month that his
\nparty would press the government to increase the salaries of 4
\nmillion civil servants to improve their standard of living so
\nthey could serve the public better.<\/p>\n
Minister of Finance Mar'ie Muhammad said earlier that even
\nthough the government agreed to increase civil servants'
\nsalaries, it would not announce it publicly to avoid inflationary
\neffects.<\/p>\n
The United Development Party faction forecasted that
\nIndonesia's oil prices would average between $17 and $18 a barrel
\nnext fiscal year, revenue from official foreign loans would
\nremain at the current level of Rp 12.4 trillion and tax revenue
\nwould increase 20 percent from the current budget.<\/p>\n
The faction proposed the 1997\/1998 budget should balance at Rp
\n102.7 trillion.<\/p>\n
The Indonesian Democratic Party faction said the government
\ncould further increase tax receipts because the country's tax
\nratio to gross domestic product was lower compared with those of
\nneighboring countries.<\/p>\n
The faction was therefore optimistic the budget for the next
\nfiscal year could balance at Rp 108 trillion, more than 20
\npercent higher than the current budget of Rp 90.6 trillion.<\/p>\n
The 1997\/1998 budget proposal will cover the fourth year of
\nthe current sixth Five-Year Development Plan period ending in
\nMarch 1999. (rid)<\/p>",
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"sponsor": "Okusi Associates",
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