Government to spend $1.82b for infrastructure projects

The government will spend Rp 18 trillion (about US$1.82 billion) next year for a range of infrastructure projects including irrigation, roads, dams and bridges, to help drive higher economic growth and reduce employment.

The expenditure would exclude funds required for toll road projects and telecommunications infrastructure, which could be sufficiently provided by the private sector, Minister of Public Works Djoko Kirmanto said on Monday.

"The funds, which would all be taken from the state budget, will be allocated for infrastructure projects throughout the country," said Djoko after meeting President Susilo Bambang Yudhoyono.

This year, the government has allocated Rp 12.78 trillion for infrastructure projects, excluding those for reconstruction works in tsunami-stricken Nangroe Aceh Darussalam and parts of North Sumatra.

Next year's planned expenditure would also exclude such projects.

Most of this year's funds, however, have not yet been realized into projects, partly because of the implementation of a new system in filing proposals for projects.

Recently installed Coordinating Minister for the Economy Boediono has said the government would boost its spending for development projects to help stimulate the economy, currently facing a speed bump in the form of high interest rates.

The government will spend between Rp 10 trillion and Rp 15 trillion of undisbursed state funds from the 2005 budget during next year's first quarter to help reactivate the real sector.

The government is counting on the private sector to revive investment in the second half of the year, with the central bank starting to gradually lower its lending rates.

The government is targeting the economy to grow by 6.2 percent next year despite weakening purchasing power, high inflation and interest rates, as well as the relatively unstable rupiah exchange rate against the U.S. dollar.

The forecast is more optimistic than that of Bank Indonesia, which predicts the economy to grow by between 5 percent and 5.7 percent next year. -- JP