Government upbeat on 2001 state budget deficit: Anggito

Tantri Yuliandini and Berni K. Moestafa, The Jakarta Post, Jakarta

Officials have said they were still optimistic the government could finance this year's budget deficit of around Rp 54.3 trillion (US$5.4 billion) despite an expected shortfall in privatization proceeds and the sale of assets under the control of the Indonesian Bank Restructuring Agency (IBRA).

Ministry of Finance specialist Anggito Abimanyu said on Tuesday that the government still had other options to secure funding to plug the gap in the state budget, including by increasing tax and non-tax revenue, and cutting spending.

"We cannot look at the state budget's components individually. There are bound to be some that come up short of expectations, some that are on target, and others that exceed the target," he told reporters here, citing revenue from taxes, which he said would likely exceed the target of Rp 156.65 trillion.

Anggito said that it was still too early to surmise that the government's privatization program had failed, despite so far having yielded next to nothing out of the targeted Rp 6.5 trillion.

"We still have time. Although we may not have achieved the whole lot, there are some that still have potential," he said without elaborating.

Besides the proceeds from privatization, the government had planned to finance the deficit from the sale of IBRA-controlled assets targeted at Rp 27 trillion, and from foreign loans. So far IBRA asset sales had yielded around Rp 19 trillion.

The 2001 state budget deficit, projected at 3.7 percent of gross domestic product, will be financed by privatization and asset sale proceeds, and foreign loans.

The two months remaining in fiscal 2001 may still yield extra earnings for the state budget that could reduce the deficit, Anggito said.

He also noted that expenditure for this fiscal year could still be suppressed by delaying some payments for capital projects.

"The capital projects could still go on, but the payments could be made next year," Anggito said, explaining that this was common practice in countries that based their budgets on cash, such as the United States.

He said that capital spending was usually high towards the end of the year.

The expected shortfall in privatization proceeds has raised concerns that the government might be forced to stop paying civil servants salary, or to start printing money.

Elsewhere, Anggito also said that the government was still working on freeing up foreign loans to cover the budget deficit.

He did not elaborate, but a government official who declined to be named said separately that the government was working on the disbursement of loans from the Asian Development Bank (ADB).

The official fell short of recalling the amount, but said the loans were tied to conditions that were unlikely to be met on time, including the deliberation of the new power bill, which legislators had yet start to work on.

"If we can get the ADB to waive the submission of the power bill to legislators as a requirement, then we may be able to unlock its loans," he explained.

According to him, local ADB representatives have expressed their agreement, but final approval was needed from ADB headquarters in Manila.

He added that in late November the government would revise its budget again in a routine procedure ahead of the end of the fiscal year.

The first revision this month was to make adjustment for the global economic downturn as a result of the Sept. 11 terrorist attacks in the United States.

If the fiscal situation called for spending cuts, he went on, they would likely come from current, and probably also capital, spending.