Govt, House discuss changes to 2002 state budget

The Jakarta Post, Jakarta

The government has proposed to the House of Representatives a revision to several assumptions in the current 2002 state budget, taking into account the latest development in the local economy and overseas.

Under the revision proposal, the government is forecasting a lower budget deficit of around Rp 40.5 trillion from the initial target of Rp 42.1 trillion, or 2.5 percent of gross domestic product.

Minister of Finance Boediono said on Tuesday that the lower deficit forecast was made possible mainly due to higher domestic revenue.

The target for state revenue has been revised to Rp 304.2 trillion, or Rp 2.3 trillion higher than the earlier target, mostly coming from nontax income, which is now predicted to reach Rp 89.9 trillion, compared with Rp 82.2 trillion in the initial plan.

Such a sharp rise in nontax income, according to the government, is expected to be able to offset an expected lower tax revenue, which would likely reach Rp 214 trillion, or Rp 5.6 trillion short of the previous target.

On the expenditure side, the target was raised slightly, by Rp 0.6 trillion, to Rp 344.6 trillion.

This comes mostly from a higher-than-expected allocation for domestic debt interest payment, from Rp 59.5 trillion to Rp 91.6 trillion.

The higher cost of servicing the domestic debt is due to a higher Bank Indonesia interest rate. The state budget currently assumes an average Bank Indonesia interest rate of 14 percent, but the rate has been averaging 15.74 percent this year.

Other key revisions in the proposal include an inflation rate assumption revised to 9.5 percent (from 9 percent), rupiah exchange rate Rp 9,280 (Rp 9,000), and international oil price at US$22.83/barrel ($22).