BI expects budget deficit in 2004

JAKARTA: The central bank expects this year to suffer a budget deficit of Rp 14.4 trillion (about US$1.71 billion) due to the rising costs in financing monetary operations.

Bank Indonesia (BI) deputy governor Bun Bunan Hutapea said the huge deficit was mainly because of the interest the bank had to pay on large deposits made by the banking sector in BI's promissory notes facility.

The deposits stood at between Rp 130 trillion to Rp 160 trillion last year.

"For that alone, it cost Bank Indonesia around Rp 13 to 14 trillion to cover the interest payments," Bun Bunan said before lawmakers during a hearing with a House of Representatives commission on financial affairs.

In 2003, Bun Bunan said the central bank enjoyed a surplus of Rp 1 trillion, thanks to the repayment of the central bank liquidity support facility by the government. -- JP