Government to deliver draft budget after Idul Fitri

Government to deliver draft budget after Idul Fitri

JAKARTA (JP): The government will delay the presentation of
its 2000 state budget draft from the usual schedule of January 1
to the middle of the month, according to finance minister Bambang
Sudibyo.

"The presentation of the 2000 budget draft may be made one
week after the Idul Fitri celebration," Bambang said on Friday
during a meeting with the House of Representatives' budget
committee.

He said the move was meant to avoid strong inflationary
pressure in early January as the government would unveil the
expected rise in the salaries of government employees and
military personnel when delivering the budget draft.

Inflationary pressure in early January is expected to be high
as people celebrate New Year and the Muslim Idul Fitri
festivities.

Delivering the budget and announcing the rise in salaries
during the same period would ignite inflation.

The government traditionally delivered the budget draft on
January 1 at the House of Representatives.

A rise in the salaries of government employees usually also
increased prices.

Several legislators have demanded a 100 percent increase in
the salaries of government employees and military personnel, but
Bambang said that it was beyond the budget's capability.

He said a 20 percent increase in the salaries of some 6.5
million government employees, including retired employees, would
cost the budget an additional Rp 5.34 trillion.

But he admitted that a 20 percent increase was insignificant
in the bid to improve the performance of government employees and
to prevent corruption.

The increase in the salaries is also seen as a fiscal stimulus
to boost demand in the ailing economy.

Bambang said that the source for financing the salary
increases would come from greater tax revenues and the reduction
of government subsidies.

Bambang said that another sensitive issue in the state budget
was the planned reduction of subsidies.

He said a reduction in fuel subsidies traditionally jacked up
prices of other commodities as transportation and manufacturing
costs would also increase.

The government is determined to start reducing its subsidies,
starting in the next budget year, in a bid to ease the burden on
the state budget.

Bambang said that the government was still making calculations
on the size of the subsidy reduction.

The country's state budget is traditionally a fiscal year
budget which runs from April to March, but starting from next
year it will be a calender year budget ending in December.

The next state budget will start in April.

Bambang said on Thursday that the next budget would assume an
exchange rate of Rp 6,500-Rp 7,500 to the U.S. dollar and an
international oil price of $16-$19 per barrel.

He also said that the budget assumption included an economic
growth of between 2 and 3.5 percent, and an inflation level of
between 4 to 6 percent. (rei)