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.