Tue, 09 Nov 1999

Govt mulls basing budget on calender year

JAKARTA (JP): Finance Minister Bambang Sudibyo said on Monday the government was considering changing the current fiscal year budget to one based on the calender year.

Speaking to reporters after a meeting of economic ministers, Bambang said that his office was preparing two versions of the budget for next year.

He said the first one was a calender year budget that will run from April to December 31, 2000, while the second was a fiscal year budget that will span from April to March 31, 2001, in case the proposal to adopt the calender year budget is rejected.

Bambang said that although members of the House of Representatives (DPR) had suggested using the calender year budget, which runs from January to December, there had not yet been any official decision.

"We'll look to consult with the leaders of the DPR," Bambang said.

The argument for changing to a calendar year budget is to simplify development planning and administration.

"We still haven't decided ... We have to make a complete study of this proposal before the government decides whether to adopt the calendar year," Bambang said.

Bambang also said the future state budget must reflect a gradual decline in foreign loans.

He said that the role of domestic financing resources, particularly tax, must be strengthened in the future to help finance the state budget.

Bambang said earlier at the weekend that another way to lower the dependence on foreign loans was to develop the domestic bond market.

He said that the upcoming International Monetary Fund's letter of intent would include a strategy on how to develop the bond market.

The Indonesian foreign government debt is currently estimated at more than US$67 billion.

The amount of foreign loans are expected to increase in the current fiscal year ending in March 31, 2000 as the government will need an additional $1.2 billion in overseas loans in the remaining period of the fiscal year.

There has been increasing criticism over such large overseas borrowing as it means that most of the country's economic resources go to servicing the foreign loans.

Several non-governmental organizations have demanded that foreign donors, particularly the World Bank, reduce the country's debt by up to 30 percent, arguing debt had been corrupted by the same amount at the hands of the previous government, with the full knowledge of the donors.

Bambang also said that another alternative to dependence on foreign loans was to lower subsidies.

The government has been subsidizing important items including fuel.

There has been suggestions that the government must gradually reduce expensive fuel subsidies to lessen the burden on the state budget.

But lowering subsidies is easier said than done, as such a measure could create massive unrest.(rei)