Soeharto unveils tight budget<\/p>\n
JAKARTA (JP): President Soeharto proposed a tight budget to
\nthe House of Representatives yesterday for the fiscal year 1995-
\n1996 which, though up by a mere 2.5 percent in real terms,
\nraises the salaries of government personnel by an average 10
\npercent.<\/p>\n
The draft state budget, which begins in April, will balance at Rp
\n78.02 trillion (US$35.5 billion) consisting of Rp 47.24 trillion in
\nroutine (operating) spending and Rp 30.78 trillion in public
\ninvestments.<\/p>\n
The government expects Rp 13.27 trillion (17 percent of total
\nrevenues) from oil and gas taxes based on an average price of
\nUS$16.5 per barrel, Rp 52.98 trillion (67.92 percent) from non-oil
\ntaxes, duties and levies and Rp 11.76 trillion (15 percent) from
\nforeign loans.<\/p>\n
The budget plan was unveiled against a robust economic growth of
\nmore than 6.5 percent last year but with a note of caution against
\ninflationary pressures.<\/p>\n
"Our inflation last year was 9.24 percent which, though remaining
\none digit, was already too high, much higher than the projected
\ntarget of five percent for the Sixth Five Year Plan period (1994-
\n1999)," Soeharto said in his budget address.<\/p>\n
He devoted a great deal of his speech to reminding the people of
\nthe dangers of an overheated economy, as the one in 1991 that forced
\nharsh monetary measures.<\/p>\n
"We must ensure that our economic growth, which is expected to
\nremain high, will not become counter productive," Soeharto added.<\/p>\n
He called for extra caution about private borrowings overseas
\nbecause the current account deficit in the current fiscal year is
\nestimated to increase to $3.5 billion from $2.9 billion last year.<\/p>\n
Soeharto reiterated the task of building a strong economy that
\nleads to an increasingly fair and equitable prosperity of the
\npeople.<\/p>\n
"That requires greater participation by the widest possible
\nsegment of the community as well as the highest possible efficiency
\nand productivity," he said.<\/p>\n
He charted out the future challenges the nation is facing amid the
\nmajor and fundamental changes in the world and called on the people
\nto prepare themselves for the new future.<\/p>\n
"Internally, the governmental and economic orders must be shifted
\nfrom a centralized to a more decentralized order so as to expand the
\npeople's initiative and creativity," Soeharto said.<\/p>\n
Externally, he added, the flow of trade, service and capital must
\nbe generated and facilitated.<\/p>\n
He reemphasized the importance of further strengthening the
\ncompetitiveness of domestic producers in facing up to the year 2020,
\nwhen Indonesia must fully open up its economy to global trade within
\nthe Asia Pacific Economic Cooperation scheme.<\/p>\n
In this context, Soeharto stressed the need to reduce the
\nprotection of domestic industries from import competition, which
\nbecame the subject of heated debates a few weeks ago following a
\nproposal from politically-well connected businessmen for high
\ntariff protection of their olefin plant.<\/p>\n
"The reduction of protection must be conducted very selectively,
\nwith planning and in stages," he pointed out.<\/p>\n
He set three conditions for the granting of protection to domestic
\nindustries: It should be given for a limited period of time and
\nshould be gradually reduced; It must not be contrary to
\ninternational trade agreements as those under the World Trade
\nOrganization, AFTA and APEC; Its level must not stifle or hinder the
\ngrowth of downstream industries.<\/p>\n
The President reiterated the need for further withdrawal, by the
\ngovernment, from economic activities that can be more efficiently
\nconducted by the people, especially the private sector.<\/p>\n
"The government gives direction, support and endorsement.
\nGovernment investments will be directed more to improve the quality
\nof human resources and the development of economic infrastructures."<\/p>\n
Minister of Finance Mar'ie Muhammad who, together with other
\neconomics ministers, briefed newsmen on the draft budget on
\nWednesday night, said that bank credit expansion in the next fiscal
\nyear would be limited to 19 percent, lower than the 25 percent
\nincrease estimated in the current fiscal year.<\/p>\n
The government will do its utmost to check inflation this year at
\nsix percent at the most, he said.<\/p>\n
Mar'ie estimates the rupiah exchange rate against the American
\ndollar at Rp 2,256 at the end of March, 1996, or representing a
\ndepreciation of three percent from the estimated level at the end of
\nnext March.<\/p>\n
Bank Indonesia's Governor Soedradjad Djiwandono projected export
\ngrowth in the fiscal year 1995-1996 at 16.5 percent, higher than the
\n14.5 percent estimated for 1994-1995, and import growth at 15
\npercent.<\/p>\n
But since private capital inflows are projected to increase to
\n$5.07 billion and official capital inflows to $6.48 billion, the
\noverall balance of payments at the end of March, 1996 will still
\nproduce a surplus of $1.8 billion despite the estimated deficit of
\n$4.1 billion in the current account (trade of merchandise and
\nservices).<\/p>\n
"We therefore expect our foreign reserves to increase from $13.7
\nbillion at the end of next March to $15.5 billion or equivalent to
\nfive months of imports in March, 1996," Soedradjad said.(vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/soeharto-unveils-tight-budget-1447893297",
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