Finance minister rules out devaluation measure<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad gave
\nassurances yesterday that the government will not devalue the
\nrupiah or take other radical steps to offset the deficit caused
\nby the fall in oil prices, which is likely to continue to be a
\nproblem this fiscal year.<\/p>\n
"There will be no drastic measure to stabilize the monetary
\nsystem," the minister told newsmen following a meeting with
\nPresident Soeharto at the Bina Graha.<\/p>\n
He acknowledged that faltering oil prices will affect the
\nstate budget, but he said that the government is prepared to
\nhandle shortfalls in revenue from the oil and gas sectors.<\/p>\n
The government's budget expects Rp 12.85 trillion (US$6.11
\nbillion) from oil and gas, which is to account for 18.5 percent
\nof estimated total state revenue of Rp 69.74 trillion ($33.2
\nbillion).<\/p>\n
The estimate on the receipts from oil and gas is based on an
\naverage oil price of $16 per barrel, far higher than the actual
\nprice which is currently fluctuating between $13 and $14 a
\nbarrel.<\/p>\n
No end to glut<\/p>\n
Oil experts see no end to the glut in sight, with some
\npredicting that oil will drop as far as $10 per barrel.<\/p>\n
Mar'ie said that a devaluation had been discussed with the
\nBudgetary Commission of the House of Representatives (DPR), but
\nfirmly rejected it as an option.<\/p>\n
Mar'ie's statement on the government's resolve to stay the
\ncourse has been repeated several times to reassure those left
\ngun shy by the actions of former finance minister J.B. Sumarlin.<\/p>\n
These included the 45-percent rupiah devaluation in September
\n1986, in order to handle falls in state revenues from oil and
\ngas, and the withdrawal of Rp 10 trillion (US$5 billion) from the
\naccounts of state-owned companies in 1990 to push down inflation.<\/p>\n
Mar'ie said yesterday that the government will reduce spending
\nor draw from its reserves if a deficit is run again.<\/p>\n
The government has set aside around Rp 3.5 trillion ($1.6
\ntrillion) in budgetary reserves for emergency purposes. Part of
\nthis will be used to offset last year's RP 1.8 trillion deficit.<\/p>\n
"We could use the reserves again if the state revenues in the
\ncurrent fiscal year do not meet the projection," the minister
\nsaid.<\/p>\n
Borrowing<\/p>\n
Meanwhile Coordinating Minister for Economy and Finance Saleh
\nAfiff said yesterday that the government will not change its
\npolicy on commercial offshore loans.<\/p>\n
"There will no change in the government's monetary policies,
\nincluding that on the control of the inflow of commercial
\noffshore borrowing," he told newsmen following a ministerial
\nmeeting on the economy at his office.<\/p>\n
Afiff said the strict control of commercial loans is essential
\nto maintain the balance of payment at a safe level.<\/p>\n
The government-set annual ceiling on offshore commercial loans
\nof about $5.6 billion to $6.5 billion applies until the next
\nfiscal year.<\/p>\n
The ceilings on foreign loans to the central bank, state banks
\nand private banks are set at $500 million, $1 billion and $500
\nmillion a year, respectively.<\/p>\n
Private companies under the existing ceilings are allowed to
\nborrow up to $2.8 billion from foreign creditors in this fiscal
\nyear and up to $2.9 billion in 1995-96, while state companies may
\nborrow up to $1.4 billion in 1994-1995 and up to $1.6 billion in
\n1995-96.(hen)<\/p>",
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