2003 budget may be based on 4% GDP growth: Kwik
2003 budget may be based on 4% GDP growth: Kwik
The Jakarta Post, Jakarta
The government may base the 2003 state budget on an economic
growth rate of 4 percent, which is the same as this year's growth
target, State Minister of National Development Planning Kwik Kian
Gie said on Thursday.
Kwik did not give an explanation for the rather pessimistic
projection, but said that the figure was a preliminary one.
"I think (an assumption of) 4 percent is realistic for the
country," Kwik said.
He was speaking to the media following a Cabinet meeting that
focused on preparations for the next state budget.
The next meeting will be held on May 8 to finalize the various
macroeconomic assumptions for the budget.
Many financial institutions and analysts said that this year's
4 percent growth target would be hard to achieve amid the current
global economic slowdown, which puts a brake on the country's
exports. However, many predict that next year's economic growth
rate would be close to 5 percent. The UN, for instance, has
predicted a 4.9 percent growth rate.
A 4 percent economic growth rate is seen as insufficient to
absorb the huge unemployment created by the devastating 1997
economic crisis.
Analysts said that the country needed to return to the
precrisis growth rate of 6 percent to 7 percent.
As for the exchange rate assumption, he said that the currency
would be hovering within the range Rp 8,750 to Rp 9,700 per U.S.
dollar.
"It would be good for the economy if the rupiah stabilized at
around 9,000 to the dollar," he added.
The exchange rate assumption in this year's state budget is
set at Rp 9,000 per dollar.
Given the current strengthening of the rupiah, it would not be
too difficult for the government to achieve that target.
The rupiah has appreciated by more than 10 percent from the
level it was at the beginning of this year. It has been getting
a boost lately from a slew of positive news, including the
successful sale of government shares in Bank Central Asia (BCA),
a rescheduling deal with the Paris Club of creditor nations over
the country's sovereign debts, and approval for the disbursement
of the IMF $347 million loan tranche.
Kwik declined to disclose the state budget deficit figure for
next year, but when asked whether it would be less than 2 percent
of gross domestic product (GDP), he said it would be very
difficult to achieve that level, given the huge cost of the bank
bailout program.
The government issued more than Rp 600 trillion-worth of bonds
in the late 1990s to finance the bank bailout program. The state
budget covers interest payments on the bonds. For this year
alone, the budget must allocate more than Rp 59 trillion to cover
the interest.
The state budget deficit this year is targeted at 2.5 percent
of GDP.