Government to submit two budget revisions

Government to submit two budget revisions

Urip Hudiono, The Jakarta Post, Jakarta

The government will submit revisions to the 2005 state budget
twice this year to address changing financial needs, including
the Rp 10.5 trillion (US$1.13 billion) welfare program to be
financed from the slashed fuel subsidy.

Minister of Finance Yusuf Anwar said on Tuesday the first
revision would be proposed to the House of Representatives in
April to address the financing needs of a series of programs
targeted directly at the poor, the reconstruction of Aceh and the
upcoming regional elections.

The first revision will be based on the assumption that
expenditures by state institutions will remain the same.

Yusuf said that in the revised budget draft the price of oil
would be set by the government at US$35 per barrel from the
previous $24 per barrel.

"The deficit will also rise to 1.07 percent," he said.

The deficit was previously set at 0.8 percent of this year's
gross domestic product. The government previously revised the
rupiah exchange rate from Rp 8,600 to the dollar to Rp 8,900.

The government announced that beginning March 1 it would cut
the fuel subsidy, which had grown massive due to soaring global
oil prices. To offset the higher fuel prices, the government
announced it would take money from the slashed subsidy and
channel it into programs targeted at the poor.

However, the funds for these programs cannot be disbursed
immediately because it involves a budget revision, which requires
the House's approval.

Yusuf said the planned budget revisions would not violate the
State Budget Law, which does not specify how many times and when
the government can revise the state budget.

"The 'when' is usually at the end of the first semester,
sometime in June or July," he said.

However, Yusuf said the revisions still required approval from
the House. "That is why we are holding consultation meetings with
the House on these revisions to secure its approval."

He hoped the House would approve the April revision quickly,
particularly as it concerned the disbursement of funds to assist
the poor.

Most of the money for these low-income assistance programs
will go toward providing free education, health care and
inexpensive rice for the poor, and financing rural infrastructure
projects.

Several legislators have expressed opposition to the
government's fuel hike policy. They also say the money from the
slashed fuel subsidy meant to finance the assistance programs for
the poor will be at risk of embezzlement. Legislators hope to
question the government about the policy.

Yusuf defended the government's actions, saying if the
government did not raise domestic fuel prices it would have had
to allocate Rp 60 trillion for the fuel subsidy in this year's
state budget.

"That is much more than our budget for education, health and
development," he said. "It is obviously unfair, so I hope the
House will consider this when considering our proposed
revisions."