Govt fails to meet state budget targets

The Jakarta Post, Jakarta

The ongoing increases in global oil prices and a volatile rupiah exchange rate have become major obstacles for the government to meet its 2005 state budget targets, according to a report.

The report shows the government has only managed to collect a total of Rp 191.41 trillion (some US$19.5 billion) in revenues, or 38.9 percent of the revised 2005 state budget target. In the expenditures, the government has only spent Rp 172.78 trillion, or 33.8 percent of its target.

Breaking down the revenues, tax yields contributed most to the state's coffers in the year's first semester, amounting to Rp 150.18 trillion (45.3 percent).

State revenues from excise, meanwhile, were at Rp 14.39 trillion (45.8 percent), whereas revenues from customs reached Rp 7.65 trillion (52.2 percent).

The government is pinning its hopes on increased tax, excise and customs revenues to finance this year's budget deficit, which is expected to reach some Rp 20.33 trillion.

Non-tax revenues -- including proceeds from the country's oil, gas and mining exports -- amounted to Rp 41.2 trillion (27 percent).

On state expenditures, the government has so far disbursed a total of Rp 109.39 trillion (30 percent) in state procurement, salaries and subsidies, and Rp 63.39 trillion (42.9 percent) in development funds for the regions.

An increase in government expenditures is expected to boost the country's economic growth, which slowed down to 6.35 percent during the first quarter, as compared to 6.67 during last year's final quarter, as government expenditures failed to materialize.

The government is expected to submit the report to the House of Representatives plenary session on Aug. 16, in which President Susilo Bambang Yudhoyono will also deliver the 2006 state budget draft.

State Minister for National Development Planning Sri Mulyani Indrawati acknowledged that the government's expenditures had been slow to materialize as many ministries and state institutions adjusted their budgeting systems to the country's new fiscal regulations.

"As of June, the use of development funds only averaged about 10 percent," she said.

Concerning the inflation rate, Mulyani said the government indeed saw further pressures from rising demand.

"To decrease the inflationary pressures from rising demand, we will improve the distribution of goods," she said.

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First semester Full year Full year

realization estimate target ----------------------------------------------------------------- GDP growth (%, y-o-y) 6.35 6.0 6.0 Inflation (%, y-o-y) 7.42 8.0 7.5 Rupiah exchange rate (Rp/US$) 9,412 9,500 9,300 ----------------------------------------------------------------- State revenues (trillion Rp) 191.41 516.03 491.59 State expenditures (trillion Rp) 172.78 542.21 511.92 Budget surplus (trillion Rp) 18.63 -26.18 -20.33 ----------------------------------------------------------------- Source: Ministry of Finance