Government upbeat on 2001 state budget deficit: Anggito

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.