Govt to shift battle with House to budget revision
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.