Government raises its target on revenue<\/p>\n
JAKARTA (JP): The government decided on Tuesday to revise
\nupward its targets for asset sales, oil export price, and tax
\nrevenues in the April-December 2000 budget year following
\npressure from the House of Representatives.<\/p>\n
The chairman of House Commission IX on state budget and
\nbanking, Sukowalujo Mintohardjo, said that the government agreed
\nto raise the target of privatization proceeds to Rp 6.5 trillion
\n(US$928.57 million) from Rp 5.9 trillion proposed in the draft
\nstate budget.<\/p>\n
Speaking to reporters after a closed door meeting with Finance
\nMinister Bambang Sudibyo, he said that the Indonesian Bank
\nRestructuring Agency (IBRA) was now expected to raise around Rp
\n18.9 trillion, compared to the earlier target of Rp 16.25
\ntrillion.<\/p>\n
Sukowalujo also said that the oil price assumption in the next
\nbudget would be US$20 per barrel compared to $18 per barrel in
\nthe earlier proposal. This is expected to allow the government to
\nmoderate its planed increase in fuel prices.<\/p>\n
\"The projected budget deficit will now decline to Rp 44.1
\ntrillion from an earlier estimate of more than Rp 45 trillion,\"
\nhe said.<\/p>\n
Bambang said that the increase in the tax revenue target was
\nneeded to finance routine government expenditures, particularly
\nthe planned salary increase for government employees.<\/p>\n
The finance minister added that the higher privatization
\nproceeds and increased IBRA asset sales revenues would help
\nfinance the budget deficit.<\/p>\n
The government has been under strong pressure to revise upward
\nits revenue targets.<\/p>\n
House Commission IX had earlier demanded the government double
\nthe IBRA asset sales target.<\/p>\n
\"We don't want to send the wrong signal to the market that
\nwe're going to adopt a fire sale strategy. This will only put
\npressure on the price of the IBRA assets,\" he said.<\/p>\n
IBRA holds more than Rp 600 trillion worth of equities and bad
\nloans taken over from banks.<\/p>\n
The House also pushed the government to raise its dividend
\nrevenues from state companies to Rp 8 trillion compared to the Rp
\n4 trillion target stated in the 2000 draft budget.<\/p>\n
\"They (the Ministry of Investment and State Enterprises) don't
\ndare. But they agree to raise the privatization proceeds,\"
\nBambang said, pointing out that it's difficult to raise the
\nprofit of state enterprises as many of them have been facing
\nfinancial difficulties.<\/p>\n
The government earlier said that it planned to divest between
\n20 percent and 40 percent in eight state enterprises in the
\nupcoming budget year.<\/p>\n
Bambang didn't say whether more companies had to be
\nprivatized to accommodate the increase in the privatization
\ntarget.<\/p>\n
The House also demanded the government raise the country's tax
\nratio from around 10 percent of gross domestic products (GDP) to
\nmore than 14 percent.<\/p>\n
But Director General of Taxation Mahfud Sidik said that such a
\nlarge increase in one budget year would equate to approximately
\n60 percent increase in tax revenues, which is impossible in the
\ncurrent economic situation.<\/p>\n
He said that based on a 3.8 percent GDP growth and inflation
\nassumption of 4.8 percent in the 2000 budget year, and
\nconsidering the current economic situation, the \"most feasible\"
\ntax increase was between 9 percent and 13 percent.<\/p>\n
The government forecast tax revenues of Rp 97.8 trillion in
\nthe draft budget.<\/p>\n
Bambang said that the increase in tax revenues would help the
\ngovernment increase \"significantly\" the salary of government
\nemployees.<\/p>\n
Meanwhile, Minister of Mines and Energy Susilo Bambang
\nYudhoyono said earlier that the government might revise downward
\nthe planned increase in fuel prices to 10 percent or less,
\nprovided that the House of Representatives and the government
\nagreed to increase the oil price reference in the state budget to
\n$20 per barrel from $18 per barrel.<\/p>\n
He said in a seminar on electricity that if the oil price
\nreference in the state budget was increased to $20 per barrel,
\nthe government could provide larger allocations for fuel
\nsubsidies.<\/p>\n
The government initially proposed an average 20 percent hike
\nin fuel prices starting April 1, but thus far the House has
\ninsisted the increase should not be higher than 10 percent.<\/p>\n
In a related development, the ministry's director general of
\noil and gas, Rachmat Sudibyo, said the budget would get
\nRp 6.5 trillion in additional revenues if the average oil export
\nprice assumed for the 2000 budget increased from $18 to $20 per
\nbarrel.<\/p>\n
\"Since higher crude oil prices will also increase fuel
\nsubsidies, net additional revenues from the $2 price rise will
\namount to Rp 2.6 trillion,\" Rachmat said on the sidelines of a
\nmeeting with the House's special team for electricity tariff and
\nfuel price. (rei\/jsk)<\/p>",
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