House approves budget revision

The Jakarta Post, Jakarta

The House of Representatives budget commission has approved the 2001 revised state budget which sees a slightly wider deficit.

The government proposed the revision earlier this week, one month before the budget year ends on Dec. 31, due to the weakening rupiah, higher inflation and rising interest rates.

The deficit widened slightly to Rp 54.7 trillion (about US$5.26 billion) from the planned Rp 54.3 trillion, but finance minister Boediono said that it was still within the safe level of around 3.7 percent of gross domestic product (GDP), as previously targeted.

Certain macroeconomic assumptions in the state budget had been off-target.

The rupiah exchange rate is expected to average at Rp 10,219 per U.S. dollar against the budget assumption of Rp 9,600; the full year inflation rate is expected to reach 11.9 percent against the 9.3 percent assumption; and the average interest rate of Bank Indonesia's three-month SBI promissory notes was 16.4 percent compared to the assumption of 15 percent.

But the government is optimistic that the full year economic growth target of 3.5 percent would still be achieved.

Under the revised budget, revenue is expected to be higher at Rp 299.9 trillion, up from an initial figure of Rp 286 trillion, while expenditure would increase to Rp 354.6 trillion from Rp 340.3 trillion.