Civil servants to get 50 percent salary hike

JAKARTA (JP): The government and the House of Representatives agreed on Tuesday to revise the draft 1999/2000 state budget to allow for a 15 percent to 50 percent salary increase for civil servants and changes in other expenditures.

Johny Alwi Banyo of the Golkar faction, who heads the working committee on the draft budget, said the proposed changes would increase the budget for the next fiscal year starting in April to a balanced total of Rp 219.6 trillion (US$24.67 billion) from the Rp 218.2 trillion initially proposed by the government in January.

Johny said the salary hike of up to 50 percent was a drastic change from the 10 percent to 20 percent raises earlier proposed by the government.

He said the lowest ranking government officials would enjoy a 50 percent pay raise, while the highest ranked ones would only receive a 15 percent increase.

Johny claimed the dominant Golkar faction influenced most of the amendments to the draft budget.

During the 32-year authoritarian rule of former president Soeharto, the House never changed the annual budget proposal and always approved it after a few weeks of perfunctory debates.

"In the past, Golkar had always rubber-stamped the government's state budget proposal. However, we have initiated several significant changes in this draft budget."

The working committee -- consisting of House members and senior officials of the finance ministry -- passed the revised draft to be deliberated in the final debates at the House's Commission VIII, in charge of state finances, on Wednesday.

The budget bill will then be passed for approval in a plenary House session on Friday.

The government agreed to decrease planned expenditures by Rp 1.5 trillion, but to raise revenue targets by Rp 1.4 trillion, Johny said.

This would allow for a Rp 2.6 trillion increase in routine spending to Rp 137.15 trillion, which includes salaries and retirement pay of civil servants and Armed Forces personnel, Johny said.

"These changes will also result in a Rp 300 billion increase to the Rp 147.5 billion initially appropriated for the development of small and medium-scale enterprises and cooperatives."

Johny said the working committee succeeded in lobbying the government to decrease by Rp 1 trillion to Rp 17 trillion the budget appropriation for the bank recapitalization program.

The Rp 17 trillion will be used to pay half of the Rp 34 trillion in interest on the bonds to be sold by the central bank to recapitalize banks. The other half will be funded by proceeds from the sale of assets seized from liquidated banks.

On the revenue side, the revised draft budget raises the receipt target from the cigarette excise duty by Rp 800 billion to Rp 10.16 trillion, as a result of planned changes in the duty rates, Johny said.

Currently, hand-rolled clove cigarettes are taxed higher than machine-made non-clove cigarettes, sparking complaints of discrimination from small scale producers.

Johny said the nontax revenue target -- mainly dividends from state companies -- would also be raised by Rp 700 billion to Rp 26.49 trillion.

However, the target of the value-added tax revenue will be lowered by Rp 100 billion to Rp 34.59 trillion due to continuing bleak business prospects.

Changes in several revenue items will increase the target of total internal receipts by Rp 1.5 trillion to Rp 142.20 trillion, Johny added.

Fundamental elements of the budget remain unchanged. They include an average rupiah rate of Rp 7,500 to the dollar, inflation of 17 percent and zero growth for the economy. (das)