Govt draft 2005 economic indicators

The Jakarta Post, Jakarta

Minister of Finance Boediono said on Wednesday that the government would submit the 2005 macroeconomic assumptions to the House of Representatives in May.

He said that the figures could be used by the new government as a basis to design the 2005 state budget.

"We'll formulate economic figures that could be achieved in 2005," he said.

He did not provide details, but according to a document from the State National Development Planning Agency (Bappenas) the government projected next year's economy to grow by 5 percent, inflation 5.5 percent, the budget deficit to be 0.6 percent of gross domestic product (GDP), the tax ratio 13.7 percent of GDP and the rupiah exchange rate Rp 8,600 per U.S. dollar.

There has been concern expressed that the new government, a result of a general election process currently under way that could last until September, would have insufficient time to complete the 2005 state budget unless the current administration helped in making an initial draft.

Boediono said earlier on Tuesday that the government fiscal policy next year should be focussed on a further reduction in the state budget deficit and in the public debt level to help maintain investor confidence in the economy.

"The deficit that grew after the (late 1990s) economic crisis has now been significantly reduced. We hope it will not grow again," he said.

The budget deficit this year is estimated at 1.2 percent of GDP, or equal to around Rp 24.4 trillion (about US$2.87 billion).

Boediono added that the government's debt level had also been reduced to around 60 percent to 70 percent of GDP, from around 100 percent of GDP during the crisis.

He said the new government should continue to prioritize a further reduction in the debt level to help create healthy fiscal conditions.

The government has won praise from international creditors over its success in significantly reducing deficit and debt levels.

Indeed, this achievement, and rising stability in the country's macroeconomic indicators, helped the government to sell a $1 billion sovereign bond issue earlier in March.