House upset over foreign aid chunk of State Budget
JAKARTA (JP): The four factions of the House of Representatives (DPR) approved yesterday the revised version of the 1998/1999 State Budget, but continued to query the unprecedented amount of foreign aid financing.
They pointed to the 43 percent of foreign aid financing in the Rp 263.88 trillion budget.
"The PDI (the Indonesian Democratic Party) faction is still not satisfied because our suggestion to lower foreign financing to below Rp 100 trillion was not accepted," said legislator Nico Daryanto.
On Tuesday, the government cut the foreign aid in the budget to Rp 114.58 trillion from Rp 127.83 trillion proposed last week, following pressure from House Commission VIII for state budget and finance.
"But it's still a huge component and is not in accordance with the State Guidelines (GBHN) which stipulates that foreign aid financing should only be complementary," Nico said.
The United Development Party (PPP) warned that developing the country with huge foreign aid financing was perilous, especially if it was implemented amid rampant corruption, collusion and nepotism.
PPP spokesman Endin AJ Soefihara said the burden for servicing the foreign aid would hamper improvements in the people's welfare and the quality of public facilities.
"The huge foreign borrowing will be a heavy burden for the country in the future," he said.
The ruling Golkar political grouping and the Armed Forces faction concurred.
Spokesman for the military faction Soeyanto urged the government to be efficient in utilizing the foreign aid, stressing that it must be ensured that subsidies, which would be financed by the foreign aid, would reach the needy.
The International Monetary Fund (IMF) and other international donor institutions, including the World Bank, Asian Development Bank, China and Australia, have agreed to provide Indonesia with $6 billion in loans to finance the huge subsidy commitments to help the poor in surviving the year-long economic crisis.
IMF Asia Pacific director Hubert Neiss arrived in Jakarta Wednesday for a two-week meeting with the government to review the fund-sponsored 36-month economic reform programs and work out details of the additional aid financing.
The government last week tabled a Rp 277.14 trillion state budget, currently in its fourth month of implementation, but it was pared down to Rp 263.88 trillion following approval from most lenders to reschedule $1.25 billion in the country's sovereign debt due this year.
Minister of Finance Bambang Subianto told House members yesterday that the source for the payment of government debts to the central bank, subsidies for fertilizers and cheap credit for small enterprises and labor-intensive projects would be the foreign aid.
Under the previous budget, these routine expenditures were primarily financed by tax revenues.
Foreign-funded development expenditures was increased to Rp 92.68 trillion from Rp 71.60 trillion proposed by the government last week, compared to domestic-financed routine expenditures which were lowered to Rp 171.20 trillion from Rp 205.54 trillion.
Under the new 1998/1999 State Budget, the economy is estimated to shrink by 12 percent, inflation to hit 66 percent, average oil price to reach $13 per barrel and the exchange rate of the rupiah against the U.S. dollar was set at Rp 10,600.
The assumptions were revised last week from a revised version made in late January. The revision was made to reflect the further deterioration in the economy. (rei)