Budget deficit to drop to 3.9% of GDP

JAKARTA (JP): The deficit in the current state budget ending on March 31 is expected to shrink to 3.9 percent of gross domestic product from the earlier forecasted 6.8 percent of GDP, according to Minister of Finance Bambang Sudibyo.

Bambang said on Tuesday the narrower deficit was primarily due to higher oil prices.

"This is better than the initially estimated Rp 83.45 trillion (US$11.20 billion) deficit, or 6.8 percent of GDP," Bambang told the House of Representatives during a hearing.

He said the budget deficit was now estimated at around Rp 44.4 trillion.

Bambang added that government revenue, including foreign loans, was expected to increase by 11.7 percent to Rp 245.33 trillion, while spending was estimated to rise by 11.6 percent to Rp 245.19 trillion.

This, he said, would result in a budget surplus of Rp 133.4 billion.

Bambang said oil and gas revenue was expected to reach Rp 56.30 trillion, more than 168 percent higher than earlier predictions.

He added that oil revenue alone was estimated at Rp 36.29 trillion, or 192 percent higher than previously expected, and gas revenue was estimated at Rp 20 trillion, 135 percent higher than the earlier target.

Oil prices have averaged around $20 per barrel during most of the budget year, compared to the $10.50 per barrel originally estimated. The price of oil currently is hovering at more than $30 per barrel.

Bambang said the higher oil and gas revenue was the main reason for the 42 percent jump in domestic revenue to Rp 201.69 trillion.

He said non-oil and gas revenue was estimated to reach Rp 145.39 trillion due to higher tax and non-tax revenue. He added that tax revenue was estimated at Rp 107.12 trillion, due largely to an increase in income taxes, land and development taxes, import duties and excise taxes.

But Bambang added that actual receipts from value added taxes and duties on imported goods were expected to be lower than earlier estimated.

He estimated income tax revenue at Rp 54.94 trillion, and said that excise tax revenue, mostly from cigarettes, was expected to reach Rp 10.40 trillion.

Bambang also said the trade surplus was expected to increase 25.4 percent from the 1998/1999 fiscal year to $22.13 billion.

He added the capital account was expected to book a deficit of $5.45 billion and the overall balance of payments would be in surplus of $1.98 billion.

Bambang also said the bank recapitalization costs to be shouldered by the state budget were now estimated at Rp 23.5 trillion from the earlier assumption of Rp 34 trillion. The decrease is due to delays in the issuance of recapitalization bonds. (rei)