Current state budget enjoying $2.2b surplus

Current state budget enjoying $2.2b surplus

JAKARTA (JP): The implementation of the current 1998/1999
state budget had resulted in a surplus of Rp 16.39 trillion
(US$2.2 billion) as of Nov. 14, 1998, according to an official
report.

The report by Finance Minister Bambang Subianto to a monthly
cabinet meeting on economic matters on Wednesday revealed that
the government had collected Rp 128.776 trillion in revenue, or
48.8 percent of the target set in the current budget.

Meanwhile, government spending totaled Rp 112.38 trillion, or
42.6 percent of the target set in the budget which ends in March
1999.

"As of November 1998, our state budget was positive. The
amount of state income exceeded expenditure, resulting in a
budget surplus of Rp 16.39 trillion," the report said.

On the income side, revenues from oil and gas totaled Rp 27.57
trillion, or 55.5 percent of the budget target; while non-oil
income reached Rp 68.94 trillion, or 69.2 percent of the target.

Meanwhile, the disbursement of foreign aid was quite slow,
giving the government Rp 32.26 trillion in funds, or 28.2 percent
of the target set by the budget.

These disbursed foreign borrowings consisted of Rp 16.92
trillion in quickly-disbursed program loans and Rp 15.34 trillion
in project-related loans.

On the other side, routine expenditure reached Rp 84.24
trillion, or 49.2 percent of total envisaged in the current
budget.

Meanwhile, development (investment) spending accounted for
only 30.4 percent of the budget, or Rp 28.14 trillion, of which
Rp 12.8 trillion was financed by rupiah-denominated funds and the
remaining Rp 15.34 trillion by foreign project-related loans.

The rupiah-denominated spending included Rp 4.47 trillion for
social safety nets and Rp 2.8 trillion for bank restructuring.

Disbursement of funds for social safety nets was relatively
slow in the first semester of the current budget, reaching only
16 percent of the budget, but it was on the rise in the last two
months.

State Minister of National Development Planning Boediono
revealed that about 25 percent of the planned spending for the
net programs had been disbursed as of Nov. 14.

He expressed optimism that despite a late start the
disbursement of funds for the social safety nets would meet the
current budget year's target.

The finance minister's report projected that the current
budget would see some changes both in revenues and spending due
to changes in some of assumptions.

The rupiah's exchange rate against the U.S. dollar, for
instance, is now projected to average Rp 9,514 per dollar for the
current budget, compared to the original estimate of Rp 10,600.

The stronger rupiah would affect both income and expenditure.
On the income side, it would reduce -- in rupiah terms -- the
value of foreign borrowing.

The realization of quickly-disbursed loans would reach only Rp
37.96 trillion, or 51.3 percent of the target set, while that of
project-related foreign loans would be Rp 27.81 trillion, or 68.6
percent of the budget.

Expenditure-wise, the strengthening rupiah would reduce
government costs for foreign debt servicing by Rp 7.57 trillion,
fuel subsidies by Rp 3.7 trillion and other subsidies by Rp 7.79
trillion.

Another important change was crude oil prices, which are now
projected to average $12.3 per barrel, compared to the original
estimate of $13.

Income from the oil and gas sector would reach Rp 43.35
trillion, or 87.2 percent of the budget target.

Both Bambang and Boediono, however, remained confident that
the falling crude oil prices on the international market now
would not affect the budget significantly and therefore, it was
not necessary for the government to revise it again.

"Our budget is safe so far despite the low oil prices. But we
are remaining cautious," Bambang said.

Boediono added: "Our cash flow is good, so there is no need to
revise the budget."

Bambang noted that the falling revenues from oil and gas would
be complemented by increasing tax and excise revenues, which were
expected to reach Rp 89.47 trillion, or 122.7 percent of the
target. (prb/rid)