Govt, IMF to discuss 2003 state budget<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Talks on the draft of the 2003 state budget will be high on
\nthe agenda for discussion between the government and visiting
\nInternational Monetary Fund (IMF) review team, Minister of
\nFinance Boediono said on Wednesday.<\/p>\n
\"The IMF will definitely give inputs for the 2003 state budget
\nbill during their visit here, although the final decision on that
\nwill be totally up to the government,\" Boediono was quoted as
\nsaying by detik.com on Wednesday.<\/p>\n
The IMF team arrived in Jakarta late on Tuesday to review the
\ncountry's progress in implementing economic reform programs, as
\noutlined in the letter of intent (LoI) signed in May. They are
\nexpected to stay here for more than a week.<\/p>\n
The LoI contains a set of economic targets that has to be met
\nby the government in return for the disbursement of IMF money.
\nIndonesia is tied to a three-year US$5 billion loan program with
\nthe IMF. So far the country has borrowed some $2.6 billion. The
\nnext loan tranche is expected to be worth around $350 million.<\/p>\n
Boediono did not provide details, but analysts have said that
\nthe budget talks would mainly focus on macroeconomic indicator
\ntargets for next year and the budget deficit target.<\/p>\n
For next year, the government has said it is aiming to slash
\nthe state budget deficit to 1 percent of gross domestic product
\n(GDP) from the estimated 2.5 percent for this year.<\/p>\n
A lower deficit is crucial, the government has said, to create
\nstable macroeconomic conditions, which would pave the way for
\nluring investment, badly needed to push economic growth.<\/p>\n
As a consequence, however, further reductions in subsidies and
\npumping up tax revenue to help offset huge budget spending --
\nparticularly on debt repayment -- would be inevitable.<\/p>\n
Such an unpopular policy would probably draw strong opposition
\nfrom legislators as it would create more difficulties for the
\ncommon people who are already suffering from years of economic
\ncrisis.<\/p>\n
Cutting fuel subsidies, for instance, would inevitably raise
\nfuel prices, which would affect every strata of society.<\/p>\n
Other targets for next year would be an economic growth rate
\nof between 4 percent and 6 percent, compared to the 4 percent
\nprojected for this year.<\/p>\n
Inflation is targeted at between 7 percent and 9 percent, the
\nrupiah exchange rate at between Rp 8,500 and Rp 9,500 per U.S.
\ndollar, the interest rate on Bank Indonesia three-month SBI
\npromissory notes at 12.5 percent to 14.5 percent and the price of
\noil at between $19 and $20 per barrel.<\/p>\n
Boediono has said that the relatively optimistic economic
\ntargets for next year were based on better political conditions
\nat home, coupled with a projected rapid recovery in the global
\neconomy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-imf-to-discuss-2003-state-budget-1447893297",
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"sponsor": "Okusi Associates",
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