Economist asks govt to revise state budget

Economist asks govt to revise state budget

YOGYAKARTA (JP): Senior economist Emil Salim has suggested the
Indonesian government revise the 2001 state budget if the rupiah
continues to hover above Rp 10,000 against the U.S. dollar.

Speaking to journalists here yesterday Emil said that the
government had no choice but to revise the stage budget if the
rupiah continued to remain at the Rp 10,000 level against the
greenback until August this year.

"If the rupiah is still hovering at Rp 10.000 per U.S. dollar
in August, obviously we have to revise the state budget," Emil
said Emil.

According to him maintaining the rupiah-dollar rate assumption
of Rp 7,800 in the state budget would no longer be realistic.

The rupiah dropped to a 30-month low of Rp 11.500 against the
U.S. dollar early last month due to the worsening political
climate and an impasse with the International Monetary Fund
(IMF).

The rupiah ended at Rp 10,740 against the U.S. dollar on
Thursday, off an earlier high of Rp 10,765, but up from Rp 10,460
on Wednesday.

Responding to journalists' questions, Emil said that there are
three factors causing the weakening of the rupiah.

"The rupiah has weakened due to three factors: the standoff
between the government and the IMF, the poor relations between
President Abdurrahman Wahid and the House of Representatives, and
the recent ethnic clashes in Kalimantan," said Emil.

"These three factors have affected the rupiah's exchange rate.
I suggest the government come to a new understanding with the IMF
so the market will not be concerned," he said.

"I think the conflict between the President and the House
should end in next General Assembly's session, meanwhile there
should be immediate reconciliation to end social unrest," he
added. (23)