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)