Mega to unveil 2004 budget, key reform program today<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
President Megawati Soekarnoputri will unveil the 2004 draft state
\nbudget and the government's post-IMF economic reform program in a
\nstate of the nation speech at the House of Representatives today.<\/p>\n
This will be a closely followed event as next year will mark a
\nturning point for the country as it is due to hold its first ever
\ndirect presidential election, and the economy will once again be
\non its own after having emerged from an International Monetary
\nFund bailout program.<\/p>\n
Many analysts expect that Megawati will outline a credible
\nkeynote economic reform program in a bid to maintain investor
\nconfidence in the economy after the current IMF program ends
\nlater this year.<\/p>\n
Government officials said earlier that the post-IMF economic
\nprogram, to be detailed in a white paper, would basically contain
\na set of economic measures focussing on macroeconomic stability,
\ncorporate restructuring, financial reform and measures to boost
\nexports and investment.<\/p>\n
The IMF began providing bailout funds to Indonesia in the wake
\nof the 1997 Asian financial crisis. The termination of the IMF
\nprogram will mean that the country will no longer be able to
\nobtain debt rescheduling facilities from the Paris Club of
\ncreditor nations.<\/p>\n
This could create risks for next year's state budget unless
\nthe government can secure other financing sources.<\/p>\n
According to government estimates, it will have to raise
\naround Rp 84 trillion (about US$10 billion) in cash to close next
\nyear's fiscal gap resulting from the budget deficit and the
\nrepayment of both foreign and domestic debts.<\/p>\n
The government plans to raise funds from the country's
\ntraditional lenders grouped in the Consultative Group on
\nIndonesia (which will convene in October), sales of government
\nassets and shares in state-owned companies, and to tap funds on
\nthe international markets by issuing some $400 million worth of
\nbonds, probably early next year.<\/p>\n
But these will all require efforts by the government to
\nmaintain investor confidence in the economy through such measures
\nas reassuring the markets that the country is committed to
\npushing ahead with tough economic reforms.<\/p>\n
The 2004 draft state budget is likely to pencil in a lower
\ndeficit of 1 percent of gross domestic product, compared to the
\n1.8 percent of GDP estimated for this year's budget. This would
\nmean the need for further spending cuts.<\/p>\n
Other economic assumptions employed in the budget may include
\nan economic growth target of up to 5 percent, 6-8 percent
\ninflation, a rupiah exchange rate of Rp 8,200-9,200 per U.S.
\ndollar, and a Bank Indonesia three-month interest rate of 9-10
\npercent.<\/p>\n
During the past six months of the year, the country has seen
\npositive improvements in all of these macroeconomic indicators as
\nreflected in the rapid appreciation of the rupiah, benign
\ninflation, and lower Bank Indonesia interest rates. Foreign money
\nhas also started to return with the stock market rallying since
\nthe beginning of the year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/mega-to-unveil-2004-budget-key-reform-program-today-1447893297",
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"sponsor": "Okusi Associates",
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