Budget realistic, except rupiah assumption: Experts<\/p>\n
JAKARTA (JP): Experts said that the government's 2001 budget
\nproposal was generally quite realistic although legislators
\nexpressed skepticism on the exchange rate assumption.<\/p>\n
"I think the figures (in the proposed budget) are quite
\nrealistic," said senior economist at PT Danareksa Securities
\nRaden Pardede.<\/p>\n
He cited the economic growth assumption of 4.5 percent,
\ninflation at 7 percent, international oil price at US$22 per
\nbarrel and an exchange rate of Rp 7,300 per U.S. dollar next year
\nas reasonable.<\/p>\n
"There is actually nothing new because the figures are mostly
\nas expected except on the non-oil and gas tax revenue target,"
\nRaden said.<\/p>\n
The government envisaged total revenues of Rp 243 trillion, of
\nwhich almost 70 percent would come from domestic taxes,
\nparticularly income tax and value-added tax.<\/p>\n
Out of the income tax target of more than Rp 93 trillion, more
\nthan Rp 75 trillion would come from the non-oil and gas sector.<\/p>\n
"The government will have to work very very hard to meet this
\ntarget," Raden said.<\/p>\n
Meanwhile, several legislators said that the exchange rate
\nassumption of Rp 7,300 per dollar in the budget draft was "too
\noptimistic."<\/p>\n
"I think the exchange rate assumption is too optimistic given
\nthe current domestic political condition," House Speaker Akbar
\nTandjung said.<\/p>\n
Akbar said if the domestic political condition remained
\nuncertain, foreign investors would not enter the country and the
\nrupiah would remain weak.<\/p>\n
Separatist movements, communal and religious clashes, and
\nconflicts between political elites have plagued the country since
\n1998.<\/p>\n
The rupiah is currently hovering at around Rp 8,785 per
\ndollar.<\/p>\n
Former chief economic minister Kwik Kian Gie, who is now a
\nmember of the House, also expressed doubt over the government's
\nexchange rate assumption.<\/p>\n
Kwik said it would be difficult to achieve the Rp 7,300 per
\ndollar target because of the inflationary threat.<\/p>\n
"If inflation is uncontrollable how can the government
\n(stabilize) the rupiah," he said.<\/p>\n
He pointed out that there had already been inflationary
\npressure even prior to the Oct. 1 fuel price increase.<\/p>\n
The government increased fuel prices between 9 percent and 25
\npercent which many analysts said could trigger inflation.
\nAnalysts said that inflation this year could rise to more than 9
\npercent, higher than the government's target of between 5 percent
\nand 7 percent.<\/p>\n
The government is also planning to increase fuel prices by
\nanother 20 percent in April in a bid to help reduce the burden on
\nthe state budget.<\/p>\n
But Coordinating Minister for the Economy Rizal Ramli said
\nthat the government had yet to decide whether it would raise the
\nfuel prices again.<\/p>\n
"It is still an open option," he said.<\/p>\n
Kwik observed that the other macroeconomic assumptions in the
\nbudget draft were realistic.<\/p>\n
He said that the first half economic performance this year
\nshould provide the "momentum" for further economic growth and
\nmacroeconomic stability in the second half and next year.<\/p>\n
But Kwik warned that the government must work to maintain the
\n"momentum."<\/p>\n
"But if the (domestic) security problems are not resolved
\nimmediately, don't expect the momentum to be maintained," he
\nsaid.<\/p>\n
"The government must realize that security, social and
\npolitical conditions are closely linked to economic stability,"
\nhe added.<\/p>\n
He cautioned that the government should not rely solely on the
\nPolice to maintain security because of their limited capacity,
\nbut should also reinstall the cooperation of the Army.<\/p>\n
President Abdurrahman Wahid acknowledged in his written budget
\nspeech, delivered by Vice President Megawati Soekarnoputri, the
\npressing security problems at home and said that the government
\nwould strengthen the role of the Police as the "protector of the
\npeople and preventer of all (disorder) and security
\ndisturbances."<\/p>\n
In a related development, the International Monetary Fund
\ncalled the draft budget a "sensible" spending plan which was
\ntrying to cope with the sensitive issues of subsidies and fiscal
\ndecentralization.<\/p>\n
"It does move toward cutting subsidies and deals with
\ndecentralization in a balanced way," IMF senior resident
\nrepresentative in Jakarta John Dodsworth told Reuters.<\/p>\n
"The difficulty will come in the implementation of
\ndecentralization, to make sure what's written in the budget is
\nimplemented in practice," Dodsworth added.<\/p>\n
The budget draft allocates more than Rp 74 trillion or around
\na quarter of the total spending to provincial and district
\nadministrations to help them carry out their new political and
\neconomic roles.<\/p>\n
The autonomy and fiscal decentralization policy is seen as a
\ncrucial measure to help prevent the country from tearing
\napart.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/budget-realistic-except-rupiah-assumption-experts-1447893297",
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"sponsor": "Okusi Associates",
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