Government to regulate borrowing by provinces<\/p>\n
JAKARTA (JP): The government is preparing a regulation to
\nensure that provincial administrations control borrowing after
\nthe regional autonomy and fiscal decentralization policy is
\nimplemented early next year, according to Coordinating Minister
\nfor the Economy Rizal Ramli.<\/p>\n
Rizal said Monday that a regulation preventing provinces and
\nregencies from embarking on a borrowing spree had been included
\nin the regional autonomy policy, but the International Monetary
\nFund has said it was not sufficient.<\/p>\n
\"We already have a regulation, but (the IMF says) it is not
\nstrong enough. So we are modifying the regulation to stay out of
\ntrouble,\" he told the press at a gathering to break the fast.<\/p>\n
He said that the regional autonomy policy was part of the
\nfocus of current discussions with the IMF reviewing the progress
\nof the country's economic reforms.<\/p>\n
The IMF is providing the government with a multibillion dollar
\nbailout package to help finance the country's three-year economic
\nreform program.<\/p>\n
The government plans to implement a regional autonomy and
\nfiscal decentralization policy on Jan. 1, 2001 in a bid to defuse
\ndemands from rich provinces to separate from the country.<\/p>\n
But concerns have been voiced, particularly by the IMF and the
\nWorld Bank, that the provincial and regency administrations would
\nembark on a borrowing spree to finance their administrations that
\nwould cause serious problems to the overall economy.<\/p>\n
Some Rp 80 trillion of the more than Rp 300 trillion spending
\nin the 2001 state budget is allocated to help finance the greater
\nadministration authority of the provinces and regencies.<\/p>\n
There have been cases in other countries where regional
\nautonomy and fiscal decentralization prompted provincial
\nadministrations to make massive borrowings to finance their
\ngreater administrative powers.<\/p>\n
Rizal also said that another problem related to the
\nimplementation of regional autonomy was the transfer of
\nresponsibility for government employees currently working in
\nprovinces and regencies.<\/p>\n
He said that responsibility for these employees must be under
\nthe respective regional administrations once autonomy was
\nimplemented, but so far only 1.2 million of the employees have
\nbeen transferred to regional administrations.<\/p>\n
\"There are around 700,000 government employees (in the
\nprovinces) who are still under the central government,\" he said.<\/p>\n
Elsewhere, Rizal said that the government was planning to set
\nup an infrastructure policy committee whose main job was to
\nquickly resolve problems that occur with infrastructure projects
\nthat involved private investors.<\/p>\n
He said that the infrastructure committee was also tasked to
\nimmediately draft a bill that would protect the interests of
\nlong-term investors in the country.<\/p>\n
Rizal explained that the development of infrastructure
\nprojects was crucial to help expedite the country's economic
\nrecovery.<\/p>\n
He said that the government was determined to allow the
\nprivate sector to handle infrastructure projects that would have
\nhigh rates of return.<\/p>\n
He said that projects with a low rate of return would be
\nfinanced by the state budget.<\/p>\n
Rizal said that the government would accelerate the
\ndevelopment of infrastructure projects particularly in tourism,
\nagriculture and marine sectors.<\/p>\n
He said that infrastructure development in the three sectors
\nwere strategic to the economy because of the competitiveness,
\npotential for creation of jobs and high added value.<\/p>\n
Rizal said that to attract investors to the various projects,
\nthe government had demanded the related ministries to provide
\npolicies and incentives that would promote a fair business
\nenvironment and competitiveness.<\/p>\n
Commenting on the economy, Rizal said that the government was
\noptimistic that it would grow by more than 4.5 percent this year.<\/p>\n
\"We want higher economic growth,\" he said, explaining that the
\nachievement of good results would provide the administration with
\nmore legitimacy.<\/p>\n
In 2001, he said that the government was determined to
\ncontinue implementation of the various economic reform programs
\nto accelerate the economic recovery. (rei)<\/p>",
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"sponsor_url": "https:\/\/okusiassociates.com"
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