Government forecasts Rp 53t deficit in 2001 budget<\/p>\n
JAKARTA (JP): The government forecast the deficit in the
\nupcoming 2001 state budget, beginning in January, to increase to
\nRp 53 trillion (US$6.39 billion) compared to the estimated Rp 44
\ntrillion for the current 2000 state budget.<\/p>\n
Director General of State Budget Anshari Ritonga said on
\nTuesday that the size of government spending in the upcoming
\nbudget was estimated at Rp 283.3 trillion, while domestic revenue
\nwas only at Rp 230.3 trillion, resulting in the deficit.<\/p>\n
Anshari said Rp 99.3 trillion (40 percent) of the total
\nspending would go to servicing the government's domestic and
\nforeign debts.<\/p>\n
He said that the deficit was still large despite the planned
\nreduction in the fuel subsidy because of the greater burden of
\nfinancing the government's bank recapitalization program and of
\nservicing official foreign debts.<\/p>\n
The deficit is expected to be financed using the proceeds from
\nthe sale of state companies, the sale of assets under the
\nIndonesian Bank Restructuring Agency (IBRA), and foreign loans.
\nThe government is scheduled to meet international donors grouped
\nin the Consultative Group on Indonesia (CGI) next month in Tokyo.<\/p>\n
Anshari was speaking on the second day of a meeting between
\nFinance Minister Prijadi Praptosuhardjo and the House of
\nRepresentatives' budgetary committee to discuss preparations for
\nnext year's budget.<\/p>\n
The 2001 budget will be the first based on a calendar year.
\nPreviously the state budget ran from April to March. The current
\nbudget, a transitional one, runs only from April to December.<\/p>\n
The newly-appointed finance minister mostly played a
\n\"mediator's\" role during the session, instructing the ministry's
\nsenior officials to answer questions or respond to criticism from
\nlegislators.<\/p>\n
Prijadi, a career banker and a close friend of President
\nAbdurrahman Wahid, was appointed last month in a major cabinet
\nreshuffle. But his appointment raised controversy particularly as
\nhe had earlier failed to pass the central bank's fit-and-proper
\ntest of his ethical and professional qualifications to lead
\nstate-owned Bank Rakyat Indonesia.<\/p>\n
Several legislators, particularly those from the major
\npolitical parties represented in the new Cabinet, had earlier
\nplanned to give Prijadi a hard time during the meeting.<\/p>\n
The only serious remarks he made during the meeting, the first
\nsince his appointment, was a rejection of calls from several
\nlegislators for the government to create a fiscal stimulus in the
\nstate budget.<\/p>\n
\"It is not right to expect the government (to create a huge
\nstimulus for the economy) because of the limited budget,\" Prijadi
\nsaid.<\/p>\n
The President is expected to deliver to the House the full
\nversion of the 2001 state budget draft next month to be debated.<\/p>\n
Designing the upcoming state budget is one of the most
\npressing tasks on the agenda of the new finance minister.<\/p>\n
Senior officials at the finance ministry said that despite the
\nhuge deficit, around a third of the budget would be used to
\nfinance the cost of the government's bank recapitalization
\nprogram and to service foreign loans.<\/p>\n
Director general of financial institutions at the finance
\nministry Darmin Nasution said that around Rp 56.3 trillion of the
\n2001 state budget or nearly 20 percent would be used to finance
\nthe interest cost of the government bank recapitalization bonds.<\/p>\n
Anshari said that another $5.2 billion would go to installing
\nthe debt principals and paying the interest of the government's
\nforeign loans or equivalent to around Rp 43 trillion, based on
\nthe current exchange rate of Rp 8,300 per U.S. dollar.<\/p>\n
The huge size of the budget expenses for the bank
\nrecapitalization program had prompted some legislators to attack
\nthe government.<\/p>\n
\"Why should taxpayers pay for the sins committed by the rich
\nbankers ... We must stop this and spend more for the poor,\" said
\none angry legislator.<\/p>\n
The government assumes a 4-5 percent economic growth in the
\n2001 state budget, an inflation rate of 6-8 percent, oil prices
\nof $17-22 per barrel, and an exchange rate of Rp 6,800-7,800 per
\nU.S. dollar.<\/p>\n
The international oil price has been hovering around the $28
\nper barrel mark, compared to the $20 per barrel average assumed
\nin the 2000 state budget.<\/p>\n
Prijadi had earlier said that the soaring oil price was
\nexpected to cut down the 2000 budget deficit to between 3.5-3.9
\npercent of gross domestic product (GDP) compared to the initial
\nprojection of 4.8 percent of GDP.(rei)<\/p>",
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