Govt set to revise 2004 budget

Despite rising concerns over the impact of soaring oil prices, the government said on Monday it was unlikely to revise downward its initial projection for 2004 economic growth.

"There are some predictions, but I think that for 2004 the economy can still grow at a level in accordance with our basic assumption for growth (of 4.8 percent)," Minister of Finance Boediono said.

Boediono also downplayed concerns that skyrocketing oil prices could drive the economy into recession.

Oil prices have been hovering at record highs near US$50 per barrel, creating worries of a slowdown in the global economy, which in turn would affect Indonesia's exports.

The government assumed an average oil price of $22 per barrel in the current state budget, but the actual average oil price so far this year has been near $34 per barrel.

Higher oil prices will increase the fuel subsidy because the country imports about one-fifth of its fuel needs, which in turn could affect budget allocations for development projects.

The government is set this week to submit a revision to the 2004 state budget. Analysts have suggested downward revisions for almost all the budget's basic assumptions, including economic growth.

The budget revision is meant to better reflect recent economic developments.

However, Boediono's remarks may indicate the government plans to stick to its 4.8 percent economic growth target. -- JP