2004 budget targets achievable: Burhanuddin

2004 budget targets achievable: Burhanuddin

The Jakarta Post, Jakarta

Bank Indonesia Governor Burhanuddin Abdullah said the monetary
targets set out in the 2004 state budget draft were achievable
despite the potential problems during the election year.

Burhanuddin told reporters on Tuesday that "the economic
developments overseas and at home bode well for us to achieve
those targets."

Under the budget bill, which was presented by the government
to the House of Representatives last week, inflation is targeted
to average 7 percent, the average exchange rate of the rupiah at
8,700 per dollar and Bank Indonesia three-month interest rates at
9 percent.

The inflation target is seen as conservative, especially when
taking into account recent optimism of Bank Indonesia to keep the
rate by year-end at a range of 5 to 6 percent.

But, Burhanuddin claimed that the target was based on various
affecting factors.

"The 2004 inflation (target) is projected to be higher than
this year's. The consideration is based on the projected economic
situation during the year, as well as aiming to maintain economic
stability to ensure sustainable development," he said.

He did not elaborate, but analysts have suggested that next
year should be a test for the government in retaining the
the current macroeconomic stability, as the country will brace
for general elections, also at a time when it will no longer have
the full backing of the International Monetary Fund.

Those circumstances are expected to put the rupiah under
pressure, which could well threaten the current positive trend of
inflation.

Moreover, the elections will probably provide extra
inflationary pressure, as political parties are expected to spend
huge sums of money to win support, a move that could increase
money in circulation.

Based on those considerations, the relatively conservative
target for inflation should be reasonable.

Elsewhere, commenting on the economic target of 5 percent
overall growth, Burhanuddin was also optimistic it would be
within reach, betting on the improving global economy, which
would in turn boost exports and foreign investment.

"If we can maintain the stability, especially in terms of
security as well as legal certainty, foreign investment will
eventually come. I am optimistic all (the economic assumptions)
can be met," he added.

Other assumptions on the budget include the country's daily
oil output of 1.15 million barrels per day, with the price
estimated at US$21 per barrel.

The government and legislators are expected to soon start the
debate on the budget, in which all the figures remain subject to
change.