Govt not thinking of spending cuts<\/p>\n
Berni K. Moestafa and Tantri Yuliandini, The Jakarta Post, Jakarta<\/p>\n
Defying signs of a revenue shortfall in this year's state
\nbudget, the government denied it had begun planning spending cuts
\nin the budget, arguing that other options existed to avoid this
\nmove.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti said on Tuesday he felt the government might still meet the
\nbudget targets for this year.<\/p>\n
\"So far, that (spending cuts) is something the government
\nhasn't thought of at all,\" Dorodjatun told reporters after
\nattending a seminar on Indonesia's economic outlook following the
\nSept. 11 terrorist strikes. The seminar was organized by the
\nFaculty of Economics of the University of Indonesia.<\/p>\n
Skepticism is running high about the sustainability of this
\nyear's state budget, with the government unable to fully tap its
\nrevenue sources.<\/p>\n
This is compounded by surging expenditure, as a weaker rupiah
\nhas driven up the cost of debt servicing to levels beyond what
\nthe budget had assumed.<\/p>\n
With tax and nontax revenues progressing in line with budget
\ntargets, the only option left to balance higher expenditure is to
\nboost deficit financing.<\/p>\n
But here the government is short in both domestic and external
\nfinancing sources to at least cover the deficit, even without
\ntaking into account the surge in expenditure.<\/p>\n
Making up the bulk of the domestic financing sources are
\nproceeds from the privatization and asset sales programs.<\/p>\n
Yet with two months to the end of the fiscal year, the
\nproceeds from privatization still stand at nil.<\/p>\n
Asset sales targets are in doubt as well, due to adverse
\nmarket sentiment clouding the outlook of future sales.<\/p>\n
Elsewhere, external financing is short by US$900 million, a
\nsum that lenders have withheld, as conditions for the loans have
\nnot been met.<\/p>\n
\"From the work we've done with (Finance Minister) Boediono and
\n(State Minister for State Enterprises) Laksamana (Sukardi), I
\nthink conditions so far are still under control,\" Dorodjatun
\nremarked.<\/p>\n
Commenting on the slow progress of privatization, he said the
\ngovernment had a variety of state firms it could choose to sell.<\/p>\n
Earlier, Laksamana said he was upbeat about the sale of
\ntelecommunications firm PT Telkom Indonesia and Bank Niaga this
\nyear.<\/p>\n
However, this optimism appears to lack the support of the
\nIndonesian Bank Restructuring Agency (IBRA), which is in charge
\nof selling Bank Niaga.<\/p>\n
IBRA deputy chairwoman for bank restructuring Felia Salim said
\non Tuesday that the agency had no plans to complete the sale of
\nBank Niaga this year.<\/p>\n
\"The divestment isn't for this year. Bank Niaga's divestment
\nstrategy is under preparation,\" Felia told reporters.<\/p>\n
She said the agency was instead focusing on selling Bank
\nCentral Asia (BCA) this year, one of IBRA's most precious assets.<\/p>\n
Other state firms in the pipeline include cement firm PT Semen
\nGresik, oil palm plantation firm PT Socfindo, and hotel operator
\nPT Wisma Nusantara.<\/p>\n
Officials estimated the sale of Bank Niaga, BCA, Semen Gresik
\nand PT Telkom could roughly total Rp 16.7 trillion (about $1.5
\nbillion). This compares to a current shortfall of some Rp 13.5
\ntrillion in both privatization and asset sales proceeds.<\/p>\n
[Assets ready for sale, estimated value (Rp trillion):]
\nPT Semen Gresik, 5.2;
\nPT Bank Central Asia, 5.0;
\nPT Socfindo, 0.4;
\nPT Telkom Indonesia, n\/a;
\nPT Wisma Nusantara, n\/a<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-not-thinking-of-spending-cuts-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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