Commission OKs state budget revision

Commission OKs state budget revision

Urip Hudiono
The Jakarta Post/Jakarta

The House of Representatives Budget Commission has finally given
its official nod to the government's 2005 state budget revision,
which will enable the poor to receive much-needed assistance and
for tsunami-stricken Acehnese to get reconstruction funds.

After a lengthy deliberation between the government and the
House, which finished at about 11 p.m. on Tuesday, Minister of
Finance Jusuf Anwar and Bank Indonesia Governor Burhanuddin
Abdullah along with Budget Commission chairman Emir Moeis
announced that the commission had in principle agreed with the
government on all revisions to the budget's allocations and
macroeconomic assumptions, despite the need to finalize several
specific details.

The commission, in particular, has requested that the
government explain in detail its disbursements of welfare
assistance funds for the education and health sectors.

"We hope to be able to work out these details within the next
two days, and then bring the budget revision to House's plenary
session next week," Emir said.

In the plenary session, the House is expected to officially
amend Law No. 36/2004 on the 2005 state budget that incorporates
the revisions.

Concerning the welfare assistance funds, the Budget Commission
has agreed to set aside a total of Rp 11 trillion (US$1.14
billion), up from Rp 10.78 trillion proposed earlier by the
government.

The government will allocate Rp 6.27 trillion of the funds to
reduce basic education fees, Rp 3.87 trillion to improve public
health services and Rp 3.34 trillion for rural infrastructure
development.

It has allocated low-income earners assistance funds to help
poor families who were adversely affected by the recent fuel
price hike.

The government raised domestic fuel prices on March 1 in order
to cut burgeoning fuel subsidies, which have been revised to Rp
76.5 trillion from a previous Rp 19 trillion in this year's state
budget. The increased amount for the fuel subsidy is a result of
the revised rupiah exchange rate -- from Rp 8,900 to Rp 9,300 per
dollar -- and the dramatic increase in the price of crude oil,
from $35 per barrel to $45.

Other macroeconomic assumptions in the budget were also
revised upwards, except for the country's oil production of 1.125
million barrels per day which remains the same. Economic growth
is expected to reach 6 percent, inflation 7 percent and the
central bank's benchmark interest rate at 8 percent.

As for funds for Nanggroe Aceh Darussalam, the commission has
agreed to set aside Rp 13 trillion for the province's
rehabilitation and reconstruction, with Rp 3.97 trillion of it
coming from the debt moratorium from donor countries. The rest of
the moratorium monies will be allocated for government reserve
funds and to help plug the budget deficit.

With these two primary additional allocations, state
expenditures will amount to Rp 511.91 trillion, while state
revenues will total Rp 491.6 trillion.

The budget deficit will therefore amount to Rp 20.33 trillion,
up from Rp 17.39 trillion. The deficit will remain at 20 percent
of the country's gross domestic product (GDP), which is expected
to reach Rp 2,624 trillion this year.

Jusuf appreciated the commission's stance and hoped that the
budget revision would help the country's financial condition to
be more sustainable and realistic.