2003 deficit under control, below target: Govt

2003 deficit under control, below target: Govt

The Jakarta Post
Jakarta

The government posted a state budget deficit in 2003 that was
slightly below target, in what Minister of Finance Boediono said
on Friday was a reflection of the government's continued fiscal
discipline.

"In general, the 2003 budget realization was in line with the
government's targets," Boediono said.

The budget deficit stood at Rp 33.7 trillion (about US$400
million) last year, slightly below the original target of Rp 34.4
trillion, thanks in part to the government's success in keeping
spending in check.

The deficit accounted for 1.9 percent of gross domestic
product, which matched the target set in the state budget.

Since the financial crisis struck in 1997, the annual state
budget has run a deficit, the result of the huge payouts the
government had to make to bail out the near-bankrupt banking
sector.

No less than Rp 600 trillion was injected into the sector,
forcing the government to service huge annual interest payments.

The budget deficits have forced the government to continue to
seek new loans from international donors -- a move seen to have
dragged the country into a deep debt trap.

Friday's announcement, however, confirmed that the government
is on the right track in gradually lowering the deficit. In 2001,
2002 and 2003, the government posted deficits of 3.7 percent (of
GDP), 2.5 percent and 1.9 percent, respectively. The government
expects to have a balanced state budget by 2006.

Aside from foreign financing, other sources the country has
used to cover the deficit are proceeds from the sales of assets
under the Indonesian Bank Restructuring Agency (IBRA) and the
privatization of state-owned companies, as well as bond issues.

As for this year, the government expects to continue the trend
by setting the deficit at Rp 24.4 trillion, or 1.2 percent of
GDP.

There is concern, however, that the lower-than-expected
deficit could be caused by the slow progress in a number of
development projects.

Boediono also said that in 2003, the government raked in Rp
341.1 trillion in revenue, slightly lower than the target of Rp
342.8 trillion, while expenditures amounted to Rp 374.8 trillion,
also below the target of Rp 372.2 trillion.

The finance ministry also predicted that the economy in 2003
expanded by 4.1 percent, slightly higher than the target of 4
percent.

This was in line with the central bank's announcement a day
earlier that economic growth was 4 percent last year.

The official calculation of the country's economic growth is
being made by the Central Statistics Agency, with the result
scheduled to be made public later this month.

For 2004, the government is forecasting economic growth of 4.8
percent.

Indonesia's economy needs to expand by about 6 percent to 7
percent annually to cut unemployment in the country. With only 4
percent growth, about 1.2 million new workers each year will fail
to find work, on top of the 40 million or so already without jobs
or underemployed.