Ginandjar to visit Tokyo to seek financial help

JAKARTA (JP): Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said on Thursday that he would meet with Japanese government officials on July 17 to seek more external financing to help plug the 1999/2000 budget deficit.

He told reporters after meeting President B.J. Habibie that he would hold discussions with Prime Minister Keizo Obuchi about the so-called Miyazawa Plan and other forms of assistance.

The US$30 billion Miyazawa Plan was promised by Japan's Finance Minister Kiichi Miyazawa last year to help revive crisis- hit Asian countries.

The terms and conditions of the bailout money, however, have yet to be clarified.

President B.J. Habibie unveiled on Tuesday the draft of the 1999/2000 state budget, which would continue to rely heavily on foreign loans.

The budget targets some $10.32 billion in foreign loans to finance the budget deficit, which is projected to reach 4.8 percent of gross domestic product.

The large projected deficit is partially the result of the heavy subsidies and social safety net spending needed to help Indonesians, particularly the 80 million living below the poverty line, survive the economic crisis.

Some analysts expect the government will not have difficulties raising the $10.32 billion in loans because Indonesia's major donor countries and institutions lent $14 billion last year to plug the current 1998/1999 fiscal year's budget deficit.

The analysts said that the Miyazawa Plan had not been factored into the draft budget's targeted foreign revenues, but would later help compensate for the expected decreased revenues from income taxes.

The Kompas daily quoted an unidentified senior government official on Thursday as saying that the government planned to finance half of the $3 billion social safety net program with aid from the Miyazawa Plan.

The government forecast a rise in income tax revenue of 57.2 percent to Rp 40.63 trillion ($5.4 billion), which economists said was an unrealistic target amid the current anemic business sector.

Income tax is counted on to be the largest contributor to domestic revenues because oil and gas revenues, traditionally the main sources of domestic revenues, are expected to decline due to falling oil prices. (rei/prb)