Considering the aforementioned, the choice only highlights the

Considering the aforementioned, the choice only highlights the need to raise domestic prices. Obviously, it is a heavy, yet unavoidable decision to maintain the sustainability of the state budget as a prerequisite for economic recovery. The balance obtained from a subsidy reduction would increase development funds available to fulfill the basic needs of people.

In a bid to lessen the burden of the low-income people as a result of the price hikes, compensatory programs will be carried out. In order not to repeat past experiences, such programs would be carefully prepared from the very beginning, as part of the process of formulating and deliberating the Draft State Budget for 2002, to ensure smooth running of the programs when the price increases are effected. Besides this, the government continues to make appropriation for supporting special rice market operations aimed at ensuring the availability of rice at a price affordable to the poor people.

Allow me now to submit the main development budget for 2002. As a result of the strong commitment to fiscal sustainability by reducing the amount of debts, funds for development become more limited. Although the nominal amount of the budget is increasing, its ratio against the GDP will decrease from 3.1 percent in 2001 to 2.8 percent in 2002. This limited budget urges the regions to take up bigger responsibilities in accordance with the larger amounts of funds that will be transferred to them. Nominally, the budget for development for 2002 is Rp 47.1 trillion, of which Rp 22.7 trillion will be locally financed and Rp 24.4 trillion will be funded by foreign loans.

The development budget fully managed by the central government will be directed more for improving the people's welfare, especially through the provision of basic needs in a more just and evenly distributed manner, the improvement of income, and the creation of jobs and the maintenance of the physical infrastructure. Some of the budget will also be spent for supporting the endeavors to create good governance and to restore order and security.

On this occasion I am not going to dwell upon the allocation of the budget in every single sector. The more detailed allocation has been distributed to the distinguished members of the House. As a general picture, however, I would touch on some of the proposed budget allocation for some sectors.

In an attempt to fulfill the basic needs of the people, the government has earmarked for the education, and health and social welfare sectors a budget of Rp 11.6 trillion and Rp 4.3 trillion, respectively. The budget allotted for the latter two uses up one third of the total development budget, while the education sector takes 24.7 percent.

The educational budget will be used for improving enrollment at elementary schools, especially the intensification of the nine-year compulsory education program, improving the quality of education, providing scholarships for children of poor families, procuring textbooks and improving the quality of teachers and other educational officials through a series of trainings.

The funds allocated for the sector of health and social welfare are intended to broaden the coverage of basic health services for the poor, homeless children, elderly citizens, the handicapped, socially disadvantaged persons, as well as for the victims of natural disasters and social unrest.

Hence, the budget allocation also serves as an effort to improve the people's income through job creation. Such an effort will be decided mostly by the people themselves, while the government will facilitate the program through the improvement of infrastructure.

The funds allocated for the agriculture, fishery and irrigation sectors are intended to strengthen food sufficiency through the improvement of food and fishery production, the enhancement of production and consumption diversification, the empowerment of farmers and rural people through the distribution of farm inputs such as seeds, fertilizers, medicines, and the expansion of market network and the improvement of supervision and information services. For the irrigation subsector, the funds are mainly directed for the maintenance and rehabilitation of irrigation networks.

The funds for the transportation and communication sectors are aimed at maintaining and rehabilitating the facilities and infrastructure for transportation services to ensure safe transportation and facilitate services to remote areas.

Accordingly, these four sectors I earlier expounded on, namely education, health and social welfare, agriculture, fishery, irrigation, transportation and communication sectors, together take up 61.3 percent of the total budget.

Besides aiming at improving the people's welfare, the central government budget is also directed at creating good governance, public order and security. To this end, the law and defense and security sectors also deserve a significant increase of budget of 48.4 percent and 40.9 percent, respectively.

The budget in the legal sector will be utilized to improve law enforcement by cracking down on KKN and human rights abuses, enforcing discipline in law enforcers, creating a clean judiciary and respect for human rights, and continuing the process of legislation within the framework of economic recovery.

While the budget for the defense and security sector will be spent for anticipating disturbances of security and public order by providing adequate equipment to enforce law and order as well as preventing crimes.

State expenditures on various sectors I previously dwelled upon form only some parts of the government undertakings as various other development activities will be implemented by regional governments. To support these programs, the government sets aside an amount of Rp 90.3 trillion for balanced funds. Despite the fact that it is the regions which have the full authority to utilize the funds, I hope that the budget will be spent in accordance with their scope of responsibility based on the principles of regional autonomy.

In total, government expenditures, including the balanced funds for the regions, total Rp 332.4 trillion. Accordingly, the budget deficit for 2002 is expected to reach Rp 43 trillion or 2.5 percent of GDP. This figure is less than the 3.7 percent estimated for the current fiscal year. The smaller deficit allows the government to decrease new foreign borrowings in line with the commitment to fiscal sustainability.

The financing of the deficit will be derived from both domestic and foreign resources. Domestic resources for financing are the proceeds from the privatization of state-owned companies and sales of the assets managed by IBRA. The privatization of state-owned enterprises will be executed in a more selective fashion and is estimated to contribute Rp 4.0 trillion to the state budget, while asset sales by IBRA are targeted to reach Rp 21.5 trillion.

These are the main programs of the government, including the proposed budget. We have a huge amount of homework and a tough task ahead, while difficult choices have to be made. However, only with the spirit of togetherness, mutual help and high discipline in implementing our common commitment will, we hope, all these problems, God willing, be solved, to lead us to a better future.

With the same spirit, we will fully cooperate with the House to deliberate the draft budget for the 2002 fiscal year. I hope the deliberation can be concluded according to the schedule so that regional governments will have ample time to formulate their respective budgets, ready for implementation early next year.