Govt, IMF to discuss 2003 state budget
Govt, IMF to discuss 2003 state budget
The Jakarta Post, Jakarta
Talks on the draft of the 2003 state budget will be high on
the agenda for discussion between the government and visiting
International Monetary Fund (IMF) review team, Minister of
Finance Boediono said on Wednesday.
"The IMF will definitely give inputs for the 2003 state budget
bill during their visit here, although the final decision on that
will be totally up to the government," Boediono was quoted as
saying by detik.com on Wednesday.
The IMF team arrived in Jakarta late on Tuesday to review the
country's progress in implementing economic reform programs, as
outlined in the letter of intent (LoI) signed in May. They are
expected to stay here for more than a week.
The LoI contains a set of economic targets that has to be met
by the government in return for the disbursement of IMF money.
Indonesia is tied to a three-year US$5 billion loan program with
the IMF. So far the country has borrowed some $2.6 billion. The
next loan tranche is expected to be worth around $350 million.
Boediono did not provide details, but analysts have said that
the budget talks would mainly focus on macroeconomic indicator
targets for next year and the budget deficit target.
For next year, the government has said it is aiming to slash
the state budget deficit to 1 percent of gross domestic product
(GDP) from the estimated 2.5 percent for this year.
A lower deficit is crucial, the government has said, to create
stable macroeconomic conditions, which would pave the way for
luring investment, badly needed to push economic growth.
As a consequence, however, further reductions in subsidies and
pumping up tax revenue to help offset huge budget spending --
particularly on debt repayment -- would be inevitable.
Such an unpopular policy would probably draw strong opposition
from legislators as it would create more difficulties for the
common people who are already suffering from years of economic
crisis.
Cutting fuel subsidies, for instance, would inevitably raise
fuel prices, which would affect every strata of society.
Other targets for next year would be an economic growth rate
of between 4 percent and 6 percent, compared to the 4 percent
projected for this year.
Inflation is targeted at between 7 percent and 9 percent, the
rupiah exchange rate at between Rp 8,500 and Rp 9,500 per U.S.
dollar, the interest rate on Bank Indonesia three-month SBI
promissory notes at 12.5 percent to 14.5 percent and the price of
oil at between $19 and $20 per barrel.
Boediono has said that the relatively optimistic economic
targets for next year were based on better political conditions
at home, coupled with a projected rapid recovery in the global
economy.