Preparing the 2005 budget<\/p>\n
The economists grouped in the Indonesia Rises, or Indonesia
\nBangkit, forum are right to assert that the current government
\nand House of Representatives do not have the political mandate to
\nlegislate the 2005 state budget.<\/p>\n
The state budget is the most important government tool in
\nimplementing fiscal policies, which detail the funds the
\ngovernment allocates toward the provision of public goods and
\nservices and the way in which the government finances
\nexpenditures. Fiscal and monetary policies are, in turn, the most
\nimportant government instrument to influence the economy.<\/p>\n
It is thus the political and constitutional right and the
\nresponsibility of those House members and the president mandated
\nby the people through this year's elections to adopt the 2005
\nstate budget.<\/p>\n
In fact, the performance and credibility of the new government
\nand House will be judged primarily by the 2005 budget, which will
\ndetermine the allocation and redistribution of resources from one
\narea to another, and from the rich to the poor. On the financing
\nside, the state budget will guide taxation policies and public
\nborrowing on either the domestic or foreign market.<\/p>\n
Formulating the state budget is therefore a vital process, not
\nonly of determining expenditures and revenues, but also of
\nsetting development priorities, the developmental aims of
\nagriculture and manufacture, and other politico-economic measures
\nto implement the government's economic vision.<\/p>\n
The 2005 budget is thus too strategic a policy to be left to
\nthe present government to prepare. The new House and government
\nshould have the full responsibility and control in making the
\nbudget, as the 2005 budget will be the first real test of the new
\ngovernment in actualizing its electoral promises to the people.<\/p>\n
The problem though is that the election schedule -- early
\nApril for the legislative election and early July for the
\npresidential election, with a second round in September -- is too
\nclose to the end of the year for the new House and government to
\ndraw up the 2005 state budget that shall be effective on Jan.1.<\/p>\n
Since the House installed by the April 5 general elections
\nwill only start working in early October, the new president and
\nvice president are to be inaugurated on Oct. 20 and the new
\nCabinet in early November, there is simply no time for the new
\nHouse and government to undertake meaningful deliberations on a
\nnew budget if the process starts from scratch.<\/p>\n
Moreover, Law No. 17\/2002 on state finances requires that the
\nstate budget be approved by the House in November to give at
\nleast two months for provincial and regional governments to
\nprepare their respective budgets.<\/p>\n
Given these time constraints, the current government plans to
\nmove up deliberations of the new budget from August to May, so
\nthat by the time the new government comes to power in early
\nNovember, it will already have a draft state budget that only
\nneeds fine-tuning.<\/p>\n
We do not agree with the Indonesia Bangkit economists' view
\nthat the early deliberations of the 2005 budget is an act to
\nusurp the authority and political mandate of the new House and
\ngovernment; nor does their demand that the government cancel its
\nplan to draft the 2005 budget make any sense.<\/p>\n
The plan is simply good will on the part of the present
\ngovernment to assist the new government in gearing up for its
\nfirst major tasks and to make the transition smooth. The present
\ngovernment seems intent only on preparing a draft budget -- which
\nis nevertheless subject to revisions by the new government and as
\nsuch, there appears to be no indications that it seeks to advance
\nits own agenda in the 2005 budget.<\/p>\n
It is certainly difficult to prepare a budget months ahead of
\nthe formation of the new government, because many assumptions for
\nkey economic indicators -- such as the rupiah exchange rate and
\ninflation and interest rates -- to a large extent depend on how
\nthe market will perceive the credibility of the new government.<\/p>\n
However, it would help establish confidence in the new
\ngovernment if the 2005 state budget is drafted upon the basis of
\ncurrent fiscal policies, which have thus far contributed greatly
\nto strengthening macroeconomic stability.<\/p>\n
In fact, there does not appear to be other alternative fiscal
\npolicies for the new government to sustain market confidence but
\nto continue the current ones, which are designed to reduce the
\nbudget deficit and government debts steadily, to reform the
\nnational tax system and increase the efficiency of expenditures.
\n_______<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/preparing-the-2005-budget-1447893297",
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"sponsor": "Okusi Associates",
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