Govt, House clash over state budget

Govt, House clash over state budget

Urip Hudiono, The Jakarta Post/Jakarta

The House of Representatives and the government clashed on
Wednesday over the necessity of revising the 2005 state budget in
response to global economic developments, particularly high oil
prices.

The government said it was willing to honor the House's
request that it not propose a revision to the 2005 budget ahead
of schedule, on the condition that it be given the flexibility to
implement certain policies not in line with the budget.

Speaking on Wednesday during the first meeting between the
government's budget team and the House, Minister of Finance Yusuf
Anwar told legislators that current conditions -- particularly
high oil prices -- made it inevitable that the government would
have to revise the budget.

The government, however, agreed it would be best to put off
the revision until after next year's first semester.

Nevertheless, the minister said, the government hoped certain
policies such as the adjustment of domestic fuel prices and the
disbursement of emergency expenditures could be implemented
before this time, with the consent of the House.

"The impact of these policies on the budget would later be
included in the government's proposed revision and would be
accounted for in the final budget report to the House," he said.

The government's proposal drew a heated response from
legislators, many of whom flatly refused to consider the
proposal.

"Because the state budget is a piece of legislation, any
changes to it must first go through the process of amendment,"
legislator Rizal Djalil of the Reform faction said.

Both the government team and the House agreed to discuss the
matter further.

The 2005 budget was drafted by the administration of former
president Megawati Soekarnoputri and was endorsed by the previous
House.

Since taking office in October, the administration of
President Susilo Bambang Yudhoyono has indicated its desire to
revise the budget, but the House, dominated by the opposition
Golkar Party and PDI-P, has insisted that any revisions take
place after the first half of next year.

The cash-strapped government plans to hike domestic fuel
prices and change the oil price assumption in the budget in order
to cut the burdensome fuel subsidy.

The government has allocated Rp 19 trillion (US$2.11 billion)
for the fuel subsidy in the 2005 budget, with a rupiah exchange
rate of Rp 8,600 per dollar and an oil price assumption of $24
per barrel.

However, the subsidy is considered too small and the oil price
assumption unrealistic given the rise in oil prices, which have
been hovering above $40 per barrel over the past several months,
rising above $50 a barrel for several weeks.

The fuel subsidy for the 2004 budget was increased to Rp 59.2
trillion from the initial Rp 14.5 trillion, on an exchange rate
of Rp 8,900 per dollar and an oil price assumption of $36.