Govt, House risk delay in budget implementation
Urip Hudiono, The Jakarta Post, Jakarta
Nearly halfway into the year, the government and lawmakers still have a long way to go before they agree on the 2005 budget revision, risking a possible hold-up in the implementation of many critical government programs.
Among the programs is that for Aceh rehabilitation and reconstruction worth some Rp 9.5 trillion (US$1 billion), whose delay would come as an irony as most of the funds came from grant aid contributed by the international community following the tsunami disaster.
Equally important is the Rp 25.4 trillion poverty alleviation program to assist low-income families to cope with the government decision to hike domestic fuel prices.
Irony also arises here, as the House is still involved in internal bickering over that government decision, despite the fact that the hike has already happened and many low-income families are already feeling the impact of price rises.
In addition, several ministries, including the Ministry of Public Works and the Ministry of Energy and Mineral Resources, have requested additional budgetary funds during their hearings with their counterpart House commissions.
The Ministry of Public Works needs an additional Rp 5.1 trillion, of which Rp 3.3 trillion will go to poverty alleviation programs to improve rural infrastructure. The Ministry of Energy and Mineral Resources, meanwhile, needs Rp 2.6 trillion more this year, mostly to finance the badly needed upgrades to the country's electricity infrastructure.
Complicating matters is that the government itself will likely change again its macroeconomic assumptions for the 2005 state budget revision, taking into account recommendations from Bank Indonesia (BI) and the Regional Representative Council (DPD) on the country's recent economic indicators.
Speaking during a hearing on Tuesday with the DPD, Minister of Finance Jusuf Anwar said that the government would accept all of DPD's recommendations for the budget revision, except for the inflation rate.
"Taking into consideration recent developments as well as recommendations from the central bank, we still see the inflation rate being able to end within the 7 to 8 percent range for this year," he said.
"The government, however, agrees that the rupiah's exchange rate to the U.S. dollar will likely fall within the Rp 9,000 to 9,300 range, and the oil price at $40 to 45 per barrel."
The DPD has recommended that the government set the inflation rate at 9 percent, the rupiah exchange rate at Rp 9,200 to the dollar, and the oil price at $40 a barrel.
BI, meanwhile, is predicting an inflation rate of 8 percent, and an rupiah exchange rate ranging between Rp 9,000 and Rp 9,300 to the dollar. During a hearing with the Minister of Energy and Mineral Resources, the House's Commission VII for energy affairs also recommended to the Budget Commission an oil price assumption of between $40 and $45 per barrel.
For the 2005 budget revision, the government upgraded the inflation rate to 7 percent from a previous 5.5 percent, the rupiah exchange rate to Rp 8,900 from Rp 8,600, and the oil price to $35 from $24.
The Central Statistics Agency (BPS) reported that the country's on-year inflation still stood at over 8 percent -- at 8.81 percent in March although it then declined to 8.12 percent in April -- following the fuel price hike.
As of 09.00 p.m. on Tuesday evening, the government was still holding further hearings with the House's Budget Commission to discuss the budget revision.