Transparent budget<\/p>\n
President Soeharto's instruction to State Minister of National
\nDevelopment Planning Ginandjar Kartasasmita that the 1998\/1999
\ndraft for the state budget be realistic and fully transparent
\nwill surely send a positive signal to the market. The chief
\nexecutive's order serves to assure the public and the
\ninternational markets that the government is fully aware of the
\nmagnitude of the problems the nation is facing and is really
\ndoing something to address them in an open, accountable manner.
\nAn atmosphere of accountability and transparency would make it
\neasier to gain cooperation and understanding on the part of the
\npublic during this period of hardship.<\/p>\n
This does not mean, however, that we can expect the rupiah's
\nvolatile rate against the American dollar to stabilize within the
\nnext few days or weeks. After all, what we are facing now is not
\na short-term liquidity crisis but the cumulative brunt of long-
\nneglected structural imbalances. The currency turmoil will likely
\ncontinue at least until the end of March, when a new president
\nand vice president are elected and a new cabinet installed.<\/p>\n
But the more positive the signals given to the market, the
\nsooner the period of uncertainty currently engulfing our economy
\nwill end. And, the more effective and quick will be the painful
\nadjustment measures in restoring our economy on the path of
\nsound, high growth.<\/p>\n
Many people may remain skeptical, after having often
\nheard such official pronouncements in the past but seeing it was
\nbusiness as usual. After all, transparency always has been the
\nmost important character of good governance missing in our state.
\nBut now there is a big difference that will force the government
\nto act. The dire economic situation the nation is facing is the
\nworst since 1965. It is a matter of survival rather than simply
\nweathering a short-term economic down cycle. The rupiah's
\nexchange rate against the American dollar has now declined by
\nmore than 45 percent over the past four months alone, giving
\nshocks to the entire economy.<\/p>\n
Preparing the coming budget is predictably an extremely
\ndifficult exercise because of the high volatility of the rupiah
\nexchange rate, which plays a significant role in determining
\nmajor items of revenues (oil and natural gas exports) and
\nspendings (foreign debt servicing). What is certain, though, is
\nthat the next budget will be a battered and bare-bones one due to
\nthe sharp decline in tax revenues. Even the current budget, which
\nis envisaged to end in March at a balanced total of Rp 101
\ntrillion, would be much lower than the original plan because most
\nof the biggest corporate-income taxpayers would suffer from large
\nforeign exchange losses.<\/p>\n
To be realistic, the coming state budget should fully reflect
\nthe true condition of the economy. Meaning that government
\nspending should be adjusted to smaller tax revenues and the
\npriority of spending should fairly distribute the pains of
\nadjustments and structural reforms being implemented. The blunt
\nfact is that we should tighten our belts for more pains next
\nyear, when the full impact of the structural reforms will begin
\nto hit the nation.<\/p>\n
As the state budget should produce a surplus of at least
\nequivalent to 1 percent of the gross domestic product -- one of
\nthe bitter medicines prescribed to stabilize the economy -- the
\ngovernment may have to slash its investment budget to allow for a
\nreasonable rise in the operating budget. Subsidies have to be
\ncut. Obviously, the top priority investments will remain in rural
\ndevelopment, poverty alleviation, education, health and social
\nservices. This spending priority is crucial because in a
\ndifficult situation such as we are in now it is always the low-
\nincome people who suffer most.<\/p>\n
The term \"transparency\", coined by the President for the
\nmanner in which the state budget should be prepared, will
\ngenerate a better political climate for state accountability
\nwhich has, thus far, been criticized by the two minority factions
\nin the House of Representatives and most private-sector analysts
\nwho describe it as lacking. Transparency means that the revenue
\nand spending accounts will be presented in such detail that the
\nHouse will be able to make a meaningful assessment of how
\ntaxpayers' money will be spent.<\/p>\n
Until last year, the draft budget had been presented only in
\nsuch broad outlines as sectoral and subsectoral spending that
\nHouse debates became mostly perfunctory exercises. Worse still,
\nsince quite a portion of non-tax revenues had not been accounted
\nfor in the budget, the House remained in the dark about how much
\nthe government actually spent and for what purposes.<\/p>\n
If a true spirit of transparency were to be really applied to
\nthe state budget, something prodemocracy activists have fought
\nfor over the past two decades, it truly would be a great blessing
\nin disguise as far as the current crisis was concerned. It would,
\nin turn, significantly accelerate the process of regaining market
\nconfidence in our economy.<\/p>",
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