Draft budget praised as turning point to crisis
JAKARTA (JP): The government's draft 1998/1999 budget and President Soeharto's speech got a nod of approval last night as many said it could serve as a turning point to the country's economic woes.
Legislator Theo Sambuaga, of the Golkar faction, said yesterday that the draft budget was "realistic".
"The draft budget shows that we are in a situation where we have to tighten our belts and implement austerity measures. We have to work hard," he said yesterday.
He praised the budget as providing a measure to overturn the dour tide facing the economy.
"I think the government was quite open and realistic in elaborating on the problems we are facing. That's why I'm confident that the government's explanation will help restore faith in our economy," he said.
"The President's speech will be a turning point in helping us remedy the current situation. I'm confident that because of it we won't be faced with an even worse situation than we are facing now."
Theo gave his support for the budget which he said maintained programs on eradicating poverty and opportunities for capital goods which would help lessen imports.
The draft budget submitted last night stood at Rp 133.49 trillion, a 32.1 percent increase from the previous year's Rp 101.08 trillion.
Hamzah Haz, chairman of the United Development Party faction at the House, said that while there was a nominal increase in the draft budget, its overall intrinsic value decreased due to the depreciation of the rupiah against the U.S. dollar.
He expressed some hesitation at the 45.9 percent increase in foreign loans in the budget which increased from Rp 13.02 trillion in the 1997/1998 budget to Rp 19 trillion in the draft budget.
"It reminds me of when we first started developing 30 years ago," he lamented. "This shows that we are still dependent on external factors in our development funding."
Funds allocated for debt payments in the current draft budget rose from Rp 30.24 trillion from the previous Rp 19.23 trillion.
Hamzah also suggested the strengthening of people's oriented economic endeavors to boost self-reliance.
Despite the 9.5 percent drop in expected income tax, Hamzah praised the realistic target given the dire economic climate faced by companies across the country.
Businessman Tanri Abeng gave his full approval of the budget and concurred with President Soeharto that companies should consider selling its assets to survive.
"What we are talking about in the next year or so is survival. So this is not the time to talk about expansion, but rather sacrifice and management reform," Tanri said after attending the plenary session at the House of Representatives.
Purely economic
Golkar legislator Ekky Syahrudin said the presidential speech should indicate to everyone that the current crisis is purely economic in nature and that there should be no question of the country's political stability.
"If the economic crisis can be resolved, then people will be calm," he said.
He said Soeharto was committed to strengthening the rupiah to Rp 4,000 against the U.S. dollar.
Golkar legislator Fahmi Idris described the decision to base the draft budget at a rupiah exchange rate of Rp 4,000 as "brave move."
"I think we have to see whether any any adjustment will have to be made pending on the economic reforms the government is undertaking," he said.
The rupiah yesterday closed at 6,950/7,250 against the dollar.
Ekky acknowledged that the current crisis was a "price we have to pay as a result of our economic inefficiency".
"We have an interest in seeing the rupiah stabilize. If not, then our currency will have no value. The government should learn from this crisis who to entrust our economy to," Ekky said. (imn/amd/mds)