Govt, House risk delay in budget implementation

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.