Budget assumptions stay despite U.S. attacks: Boediono
Budget assumptions stay despite U.S. attacks: Boediono
JAKARTA (JP): The government said Monday that it would
maintain the macroeconomic assumptions employed in the 2002 draft
state budget despite recent developments in the global economy
brought about by the terrorist attacks on the United States.
Finance minister Boediono said that the macroeconomic
assumptions were realistic enough, and that it was too early to
predict how the attacks on the U.S. would effect either the
global or the domestic economy.
"The same goes for the international oil market. Although
there have been indications that the price of crude oil is
rising, we need to exercise caution, especially as this external
indicator is only temporary and can't yet be used as a
benchmark," he told a plenary meeting with the House of
Representatives.
Two aircraft slammed into the World Trade Center last Tuesday
causing its two towers to crash to the ground. Another aircraft
slammed into the Pentagon in Washington, seriously damaging the
building. A fourth plane crashed in Pennsylvania.
The attacks have raised concerns about a possible global
economic depression.
In the 2002 draft state budget, the government has assumed an
economic growth rate of 5 percent, inflation rate of 8 percent,
rupiah-dollar exchange rate of Rp 8,500, three-month SBI rate of
14 percent, crude oil price of US$22 per barrel, and an oil
production level of 1.23 million barrels per day (bpd).
The deficit was set at 2.5 percent of GDP or about Rp 43
trillion, compared to 3.7 percent in the current 2001 state
budget.
"The government is fully aware that with a deficit of 2.5
percent of GDP the country's financial situation in 2002 will
still be tight," he said.
However, to help stimulate the country's economy and therefore
cover the 2.5 percent deficit, the government will content itself
with setting a tax ratio of 12.8 percent instead of the 13.6
percent initially agreed with the House budget committee,
Boediono said.
He said that it was important for the revival of an ailing
economy that it not be overburdened with a high tax ratio.
The government expects to receive Rp 41.8 trillion (about $4.6
billion) in cash from the privatization of state enterprises and
the sale of assets managed by IBRA, of which 60 percent will be
used to cover the 2002 state budget deficit, Boediono said.
The remaining Rp 16.4 trillion will go on redeeming government
bonds.
Another Rp 17.6 trillion needed for covering the deficit will
come from overseas sources, including loan programs under the
Consultative Group for Indonesia (CGI) and the restructuring of
about Rp 34.7 trillion of Indonesia's sovereign debt through
Paris Club III.
"To achieve maximum financial support from the CGI, we will
need to satisfy other requirements for the disbursement of
ongoing loan programs, such as those organized by the World Bank,
Asian Development Bank and the Japanese government," Boediono
said.
Paris Club
Elsewhere, Boediono said that the postponement of the Paris
Club meeting of creditor nations due to the attack on the United
States would not effect the Club's commitment to rescheduling the
country's sovereign debts maturing in 2001 and 2002.
"I'm optimistic that we will achieve (a rescheduling) in the
near future," he said on the sidelines of the plenary meeting
with the House.
Last week's Paris Club meeting with the government had to be
postponed because the representatives from the United States were
unable to travel to Paris.
"It was just a technical problem. We heard there were some
(representatives) who failed to arrive because there were no
planes out," Boediono said.
International airports in the United States were shut down in
the wake of last week's terrorist attacks.
Asked about the prospects of an additional rescheduling
facility from the Paris Club, Boediono said that the negotiations
were still at the preliminary stage and that he would still need
to approach the individual creditor nations for support.(tnt)