Habibie ready to unveil his 1st budget today

Habibie ready to unveil his 1st budget today

JAKARTA (JP): President B.J. Habibie is set to unveil his
first draft budget to the House of Representatives (DPR) today
amid simmering political tensions and a sagging economy.

The President is scheduled to address the House plenary
session at 10 A.M. to outline the budget for the 1999/2000 fiscal
year, which begins on April 1.

The House will then deliberate the draft budget and pass it
into law.

Unlike during the 32-year rule of former president Soeharto,
the government is likely to face a challenge from the House
before the budget is approved. Under Soeharto, the legislative
body gained notoriety as the government's rubber stamp.

The government is expected to allocate considerable sums of
money to provide subsidies in the 1999/2000 budget under the
auspices of the social safety net programs and to assist small-
scale entrepreneurs.

The government will also disclose the funds it intends to
allocate to finance recapitalization of the country's beleaguered
banks.

Many analysts have predicted that the upcoming budget will run
at a large deficit as the result of depressed oil prices and
stunted tax revenues generated by the government since the
economy sank into recession.

In a November report, finance minister Bambang Subianto said
that the government would assume a crude oil price of between
US$12 and $13 per barrel, a rupiah-U.S. dollar exchange rate of
between Rp 7,000 and Rp 8,000, economic growth between 1 percent
and minus 1 percent, and inflation of between 15 percent and 20
when drafting the 1999/2000 budget.

Inflation was recorded at 77.63 in 1998.

Economist Pande Radja Silalahi of the Center for Strategic and
International Studies called on the government and the House to
avoid making a major issues of the assumptions used to draft the
budget.

"Assumptions used to calculate the budget must be regarded
merely as a guide and prone to changes," Pande told The Jakarta
Post.

In 1998, the government was forced to revise the 1998/1999
budget three times because of the rupiah's roller coaster ride
against the dollar.

Many have predicted further volatility in the rupiah this
year, particularly around two major political events -- the
general election in June and the subsequent presidential election
in November.

It is feared that both events could lead to widespread
violence and chaos.

Pande expressed hope that the government would exercise wisdom
and austerity in next year's budget, pointing out that economic
and political uncertainty would linger in the country and that a
global economic downturn was also a real possibility.

"Unlike in previous fiscal years, the degree of uncertainty
will be very high and it will be hard to make precise
calculations for the budget," he told the Post on Monday.

Pande warned the government against including populist
measures in the budget to improve the political standing of the
current administration, which continues to be undermined by its
close association to Soeharto.

The government should instead focus on revitalizing economic
activities using sound economic judgment, particularly in the
real sector and through the social safety net program, he said.
(das)