House approves higher proposed spending

Urip Hudiono, The Jakarta Post, Jakarta

The House of Representative's Budget Committee finally approved on Thursday the basic assumptions for the 2006 state budget, accommodating the government's last-minute proposal of higher spending to stimulate economic growth of 6.2 percent.

The Committee, however, only approved Rp 4 trillion (US$400.8 million) in additional expenditure for such labor-intensive, development projects as road construction and school building repairs, from the government's proposed Rp 5 trillion and Rp 10 trillion in unspent projects to be carried over from this year's budget.

With the additional spending, total expenditure for next year will amount to Rp 647.6 trillion -- some 15 percent higher than the Rp 559.2 trillion initially proposed -- which includes Rp 54.3 trillion for fuel subsidies.

The country's gross domestic product (GDP), meanwhile, is expected to grow by 6.2 percent to Rp 3,041 trillion next year, from the initially proposed Rp 2,996 trillion, and the committee's previous deliberation of a 6.1 percent growth to Rp 3,032 trillion.

On the revenue side, the government expects to rake in Rp 625.2 trillion in total revenue, with Rp 416.3 trillion in tax income forming the bulk of it.

The budget deficit was agreed at Rp 22.4 trillion, at a sustainable 0.7 percent of GDP, as compared to the government's last proposal of 1.1 percent.

All the figures still have to be approved by a House plenary session scheduled for Friday.

Prior to the approval, several legislators questioned a sharp 57-percent increase in the Presidential budget, which was said to be for the purchasing of a new Presidential aircraft.

The Indonesian Democratic Party of Struggle (PDI-P) faction chairman Tjahjo Kumolo said the faction would make its opposition known to the hike during the plenary session.

Minister of Finance Jusuf Anwar clarified the issue, saying the budget's initial proposal never mentioned an aircraft purchase, but only its lease and maintenance cost, and that any statement about it from his staff member was a "slip of the tongue".

Jusuf further said that the 57 percent increase came from the fact that the Presidential budget is now combined with miscellaneous expenditure.

"If we only take into account the Presidential budget alone, then the increase will only be 26 percent, and I think that is still appropriate due to rising costs from rising fuel prices," he said.