Budget safe despite wayward assumptions: Boediono says
Adianto P. Simamora, The Jakarta Post, Jakarta
Minister of Finance Boediono said on Tuesday that several key macro economic assumptions under the 2001 state budget had been off-target, but he assured that the budget was safe.
He told legislators that the budget deficit for this year would only widen slightly to Rp 54.7 trillion (US$5.26 billion) from the planned Rp 54.3 trillion.
But he said that it was still within the safe limit of around 3.7 percent of gross domestic product (GDP), as targeted.
"The budget is safe," he announced.
Boediono met with the House of Representatives state budget committee to report the final figures of the 2001 state budget, which ends on Dec. 31
He said that until the end of the budget year, the rupiah exchange rate assumption was expected to average at Rp 10,219 per U.S. dollar against the budget target of Rp 9,600; the full year inflation rate was expected at 11.9 percent against the 9.3 percent target; and the average interest rate of Bank Indonesia's three-month SBI promissory notes was 16.4 percent compared to the assumption of 15 percent.
He added that the average oil price for the year was $24.6 per barrel, compared to the target of $24 per barrel.
Boediono was optimistic that the full year economic growth target of 3.5 percent would still be achieved.
There had been concerns earlier that the worsening macro economic condition and the recent fall in the international oil price would cause the budget gap to widen to a dangerous level.
Meanwhile, Danareksa Research Institute economist Raden Pardede said that with the government missing its key macro economic assumptions, GDP growth for this year would also be lower than the 3.5 percent target.
He estimated growth this year to be at 3 percent.
He said that the country's macroeconomic condition has been worsening after the local currency continued to weaken against the U.S. dollar and the increase in domestic interest rates.
Under the proposed budget revision, which is normally submitted to the House before the budget period ends, revenue was expected to be higher at Rp 299.9 trillion from the initial figure of Rp 286 trillion, while expenditure would increase to Rp 354.6 trillion from Rp 340.3 trillion.
The higher revenue is particularly due to higher revenue from certain taxes, excise and non-tax revenue.
The higher spending is particularly due to an expected sharp increase in routine spending at Rp 232.8 trillion or 9.1 percent higher.
But on the other hand, spending for the development program is expected to decline Rp 39.4 trillion or 13.4 percent lower than target.
Boediono did not touch upon the issue of the Rp 6.5 trillion revenue from the privatization program, which the government has so far not been able to collect.
But a government official said that there was around Rp 7.5 trillion worth of funds supposed to be used for paying state- owned oil and gas firm Pertamina and electricity company PLN for fuel and power subsidies, which could be diverted for covering the shortfall in the privatization proceeds. He said that the government could delay the payment until next year, pending the completion of an audit on the two companies.