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.