Ginandjar to visit Tokyo to seek financial help

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)