Govt's growth target ambitious: Sri Mulyani

Dadan Wijaksana, The Jakarta Post, Jakarta

While the overall targets in the newly approved 2004 state budget appear to be achievable, the 4.8 percent economic growth target should pose a tougher challenge, said an expert.

Prominent economist Sri Mulyani, International Monetary Fund (IMF) executive director for Southeast Asia, called the growth target "ambitious" on Tuesday.

"...Next year, the state budget is faced with the task to reduce the deficit, while it is also burdened with achieving a high level of growth and making huge debt payments," Sri told reporters after a meeting with the House of Representatives budget commission.

The 2004 budget, which marks the first fiscal year without the IMF special lending program, contains optimistic targets set out by the government and the House, with a lower deficit and higher economic growth.

The targets were approved despite the huge foreign debt payments resulting from the absence of the debt rescheduling facility from the Paris Club of creditor nations. Indonesia will no longer eligible for this facility once the IMF program terminates at the end of the year.

The government said its optimism was based on the assumption that the global economy would continue to improve, coupled with continued strong consumption at home.

Improvement in the world economy, especially major economies such as the U.S., Japan, Singapore and China, would provide a positive impact on the performance of the country's investments and exports. This, combined with progress on the domestic consumption front -- very likely in 2004 spurred by the expected huge spending for political campaigns -- the government believes it has set challenging, but attainable, budget targets.

The deficit is set at Rp 24.4 trillion, or 1.2 percent of the country's gross domestic product, lower than this year's 1.9 percent. Last year, the state budget booked a deficit of 2.5 percent.

Sri welcomed the gradual decline in deficit, as it would in turn limit the government's need to seek more loans from international creditors.

While expressing confidence in the government's ability to meet the targets, she cautiously added whether the government could maintain its discipline in meeting a lower deficit and higher growth simultaneously.