Budget safe despite wayward assumptions: Boediono says

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.