Draft budget praised as turning point to crisis

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)