Government scales down 1999/2000 budget deficit estimate
Government scales down 1999/2000 budget deficit estimate
JAKARTA (JP): Finance minister Bambang Sudibyo revised
downward the 1999/2000 budget deficit to 3.75 percent of gross
domestic product (GDP) from an earlier estimate of 4.8 percent.
Speaking at a working session with the House's budget
committee on Monday, Bambang said the lower estimated deficit was
due to higher oil prices and the rescheduling of the government's
overseas debts.
The initial estimate for the fiscal year ending March 2000 was
6.8 percent of GDP, but Bambang recently revised it to 4.8
percent.
The government initially projected it would receive Rp 20.96
trillion (about US$3 billion) in oil and gas revenue this fiscal
year, based on the crude oil price assumption of $10.50 per
barrel.
Oil prices started to move upward beginning in the middle of
last year, reaching $16 per barrel and hovering around $25 per
barrel recently.
In the first semester alone, the government received some Rp
21.69 trillion in oil and gas revenue.
"The average crude oil price in the second semester is
expected to be $20 per barrel," Bambang said.
He said the country's overseas debts reached $144.95 billion
as of June 30, 1999, consisting of $70.69 billion in government
overseas debts, and $74.26 billion owed by the private sector and
state companies.
Bambang said the government was expected to be able to
reschedule some $1.6 billion in foreign loans maturing this
fiscal year to reduce debt servicing.
He said the government spent some Rp 19.6 trillion in the
first semester for the installment of the principal and interest
of its foreign debts, and the figure is estimated to reach Rp 22
trillion in the second semester.
Bambang also said that total expenditures for this fiscal year
were expected to fall to Rp 216.04 trillion from the earlier
projection of Rp 293.6 trillion.
The current state budget is heavily burdened by spending on
the country's bank restructuring program and huge subsidies on
fuel, electricity, foods and education.
The state budget is expected to provide Rp 17 trillion to help
finance the bank restructuring program in the fiscal year.
The budget is also allocating Rp 6.8 trillion for food
subsidies and Rp 7.1 trillion for electricity subsidies.
Spending for the fuel subsidy totaled Rp 11.37 trillion in the
first six months of the fiscal year, and Bambang said that
another Rp 20 trillion would have to be provided in the second
semester based on the assumption that the average oil price would
be $20 per barrel.
Bambang said the government was determined to gradually lower
the subsidies to ease the burden on the state budget.
He said the government was planning to propose a law on
subsidies in a bid to determine if a given subsidy benefited the
intended target.
The subsidy policy is based on a presidential decree.
Bambang said the benefits of the current government subsidy
were also enjoyed by the affluent.
"Many members of the intended target do not benefit from the
government subsidy policy," he said.
The government, the World Bank and the International Monetary
Fund are expected to meet soon to design steps on how to
gradually lower the subsidy.
Subsidies are a sensitive political issue in Indonesia. A
drastic reduction in subsidies could heavily detract from the
government's popularity.
A major cut in the fuel subsidy by then president Soeharto
last year was among the contributors to his loss of power. (rei)