Government counts costs of rebuilding ravaged Aceh

Government counts costs of rebuilding ravaged Aceh

Leony Aurora, The Jakarta Post/Jakarta

As more images of destroyed cities pour in from Aceh, the
government has doubled its initial projection for the cost of
infrastructure reconstruction in the decimated province to Rp 10
trillion (US$1.07 billion).

Coordinating Minister for the Economy Aburizal Bakrie said on
Wednesday the estimate was revised after discovering the level of
devastation in Meulaboh, the capital of West Aceh regency located
on the province's western coast, which bore the brunt of the
fifth largest earthquake in the history of the world, followed by
catastrophic tidal waves on Sunday.

"The reconstruction will begin in February (2005)," said
Aburizal.

Vice president Jusuf Kalla said that the rehabilitation period
would be between 2005 to 2006, while reconstruction would take
until 2009.

The emergency fund needed to assist refugees, most of whom
left their submerged homes with only the clothes on their backs,
is estimated at Rp 1.35 trillion over the 12 months.

"(The funds will be collected) from the people," explained
Aburizal. Donations from the business community, which thus far
had reached Rp 50 billion, and financial aid from foreign
institutions and governments was also expected, he added.

The donated money will be used to provide food, clothing,
medical supplies and other necessities.

Several aid agencies and health officials fear that famine and
disease are imminent for the tens of thousands of refugees as
food supplies were running out and humanitarian relief was still
being held in Medan due to transportation difficulties.

Humanitarian aid groups have also expressed concern about
possible outbreaks of cholera and other ailments as there were
difficulties in obtaining clean water and hygienically prepared
food.

The Ministry of Finance's treasury directory Mulya Nasution
said that the government could disburse Rp 200 billion from this
year's budget in the next two working days, should there be a
request from the National Disaster Management Coordination Board
(Bakornas PB).

"In the 2005 budget, we also have Rp 2 trillion of emergency
funds available," he said.

The government urgently needs financial assistance if it is to
help the victims of the earthquake and tidal waves, as its budget
deficit is still a huge problem.

The deficit is expected to soar to more than Rp 26.3 trillion,
due to record high crude oil prices, which have dramatically
increased its share of fuel subsidies in the country.

Fuel subsidies have almost tripled from the original projected
allocation of Rp 26.4 trillion to Rp 73.8 trillion.

The cash-strapped government has announced plans to raise fuel
prices next year to minimize subsidy costs.

Some analysts believe that the earthquake disaster might help
silence the staunch critics of the fuel price hikes, given the
urgency of accumulating budget funds to help people in Sumatra.

However, economists such as Chatib Basri of the University of
Indonesia disagreed.

"I think if the fuel price hike is applied now, it will be
politically risky. Even if those extra budget funds would go to
the needy Acehnese, will non-Acehnese want to carry that burden?"
said Chatib.

Chatib said a hike in fuel prices and drop in the government
subsidy needed to be thoroughly explained to the public. When the
hike is implemented, the subsidy savings could go to various
funds, particularly the Aceh reconstruction fund.