Govt to shift battle with House to budget revision
The Jakarta Post, Jakarta
The government will submit a revision to the 2005 state budget to the House of Representatives on Wednesday, in response to the House's decision to review the government's fuel policy in discussions of the budget revision.
"The President will sign the revision tomorrow," Cabinet Secretary Sudi Silalahi said late on Tuesday after a limited Cabinet meeting.
Earlier in the day, Coordinating Minister for the Economy Aburizal Bakrie said, "We will then immediately submit the revision to the House, so we can start discussing it with the House's budget commission as soon as their recess is over."
Lawmakers will begin a one-month recess on Friday.
The House's deliberation and approval of the budget revision is the next crucial step in securing the government's recent decision to raise domestic fuel prices to reduce the fuel subsidy.
To offset the impact of higher fuel prices, the government has said it will provide Rp 17.8 trillion (US$1.9 billion) to fund assistance programs for the poor. These funds require the approval of the House before they can be disbursed.
Despite opposition from some sections of the House and the public, the government raised domestic fuel prices by an average of 29 percent on March 1. The government said the move was made to reduce the crippling fuel subsidy, which could have risen to some Rp 100 trillion due to soaring global oil prices, as well as to encourage more efficient fuel use and prevent fuel smuggling.
To lessen the impact of higher fuel prices on the poor, of the Rp 20.3 trillion saved by cutting the subsidy, the government will set aside Rp 10.5 trillion to fund programs that will directly target the poor.
Another Rp 7.3 trillion has been earmarked in the unrevised 2005 budget to fund these programs.
On Monday, a major hurdle for the government's fuel policy was cleared when the House -- after a week of heated debate -- decided that the policy simply needed to be reviewed during discussion of revisions to the 2005 state budget.
The House essentially voted to support the fuel price increases, but the government will need to discuss its assistance programs for the poor and their funding with relevant House commissions.
Aburizal said the budget revision would include raising the government's oil price assumption from $24 per barrel to $35 per barrel, as well as increasing the budget deficit assumption from 0.8 percent of gross domestic product to 1.07 percent.
The government also is expected to revise its assumptions on the rupiah exchange rate from Rp 8,600 against the U.S. dollar to Rp 8,900 per dollar, and the inflation rate from 5.5 percent to 7 percent, while maintaining the country's oil production target of 1.125 million barrels per day.
"We will also talk with the House about the allocation of our proposed funds for welfare programs for the poor," Aburizal said.
The government, however, must get the revision to the House soon, as lawmakers will begin their recess on March 24.
Aburizal said earlier that if lawmakers were willing, the government was ready to discuss the budget revision during the House's recess.
There has been no response from lawmakers to this suggestion.