`BI to suffer budget deficit in 2003, 2004'<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia expects a deficit in its budget this year and
\nnext, as it is unlikely to generate enough income to enable it to
\nkeep up with increasing expenditures, said Central Bank Deputy
\nGovernor Bun Bunan Hutapea.<\/p>\n
"This year, for example, we forecast Rp 13.4 trillion in total
\nrevenue -- generated from managing foreign exchange reserves,
\ncredits and others -- while our expenditures are estimated at Rp
\n22.1 trillion," Bun Bunan told a hearing with lawmakers on
\nThursday.<\/p>\n
He said that expenditures mostly came from expenses in
\nexecuting monetary operations, servicing foreign loans and
\nsupervising the banking sector.<\/p>\n
Consequently, while for this year the central bank would not
\nneed additional funding to help cover the deficit, that would not
\nbe the case for next year, he said.<\/p>\n
Bun Bunan reiterated that the central bank might need about Rp
\n5 trillion from the government next year in order to maintain the
\nrole of Bank Indonesia.<\/p>\n
The government is expected to inject the funds as part of a
\nburden-sharing mechanism to cover the huge cost of the Bank
\nIndonesia liquidity support facility, worth Rp 144.5 trillion,
\nwhich was injected into troubled banks in the late 1990s.<\/p>\n
Under the mechanism, the Ministry of Finance would issue
\npromissory notes to the central bank. The ministry would only pay
\ninterest on the notes if Bank Indonesia's capital falls below 5
\npercent of its monetary obligation. If Bank Indonesia's capital
\nratio is above 8 percent, the surplus will be used to retire the
\nnotes.<\/p>\n
However, the House of Representatives has not yet approved the
\ndeal.<\/p>\n
Under the scheme, Bank Indonesia would need additional funding
\nof about Rp 5 trillion for 2004 to retain its capital ratio above
\n5 percent, Bun Bunan said last week.<\/p>\n
"That's why we have been requesting that this case be resolved
\nsoon so it can benefit us all," he said.<\/p>",
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"sponsor": "Okusi Associates",
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