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)