City to reduce 1998/1999 budget 35% to Rp 1.8t

JAKARTA (JP): The city administration will reduce its current budget of Rp 2.79 trillion (US$372 million) by 35 percent in line with the negative growth projection for the national economy, Deputy Governor for Economic Affairs Harun Al Rasyid said yesterday.

Harun said the city budget would likely be set at only Rp 1.8 trillion for the 1998/1999 fiscal year.

"The consequence is that possibly only half of the projects proposed in the 1998/1999 budget will be realized. Therefore all unit chairpersons should prioritize the projects which have been submitted.

"We will concentrate on financing the routine expenditure first. What's important here is that there shouldn't be any stagnation."

Harun said the administration had gathered all unit heads to discuss which projects would be allowed to proceed, but he declined to elaborate.

The current budget of Rp 2.79 trillion, which was passed by the City Council in February, is 10.42 percent lower than the budget of Rp 3.12 trillion for the 1997/1998 fiscal year.

The current budget was prepared under the assumption of zero economic growth with 25 percent inflation in the city, he said.

Harun told reporters last month that the city's economy was projected to grow at minus 2.47 percent (not minus 2.74 percent as was reported earlier) this year.

In line with an agreement reached by the government and the International Monetary Fund (IMF) last week on a new set of economic reform measures, the economy, originally predicted to have zero growth, is now predicted to contract 4 percent this fiscal year.

City councilors Amarullah Asbah and Lukman Mokoginta agreed with the city administration's decision to revise its budget.

However, Lukman, a member of Commission D for development affairs, said that now was not the time to determine the size of the budget as the situation was still changing.

"The administration should just wait until the IMF disburses its funds, which are badly needed to help stabilize the value of the rupiah.

"Maybe the exact time is after the implementation of Law No. 18/1997 on tax and regional levies after we have a figure for our revenues," he said.

Under a law passed by the House of Representatives in April last year, the central government cut the number of categories of local taxes from 42 to nine and levies from 192 to 30.

Minister of Home Affairs R. Hartono issued Instruction No. 9/1998 dated March 23, 1998, on the cutting of the collection of 73 taxes and levies.

Of the 73 taxes and levies, governors were ordered to cut the collection of three taxes and 16 levies.

The three taxes are on fishing licenses, water transportation vehicles and the change of ownership of water transportation vehicles, while the 16 levies include fees on tourism licensing and fuel storage.

Amarullah, head of Commission C for financial affairs, said over the weekend that "the national growth of minus 4 percent will substantially affect the city's growth".

He told the administration to push city-owned companies to improve their performance so as to enable them to give bigger financial contributions to the city. (ind)