House urges tight budget for 1999/2000

JAKARTA (JP): The House of Representatives (DPR) urged the government on Wednesday to draft a tight, realistic state budget for the 1999/2000 fiscal year, saying that Indonesia's economy would still be vulnerable next year.

The four factions in House Commission VIII for finance and the state budget also called on the government to prioritize expenditure on social safety net programs providing food and jobs to millions of Indonesians affected by the economic crisis.

"A deficit of routine and development expenditure against domestic revenue is only acceptable if the funds are used to finance urgent projects to help the poor," United Development Party (PPP) faction spokesman Irgan Chairul Mahfiz said during the hearing with Minister of Finance Bambang Subianto.

Yesterday's hearing was the last in a four-day series of hearings with the minister.

All four factions -- the PPP, Golkar, the Armed Forces and the Indonesian Democratic Party (PDI) -- called for a realistic budget to avoid the need to undertake revisions in the event of changes in the country's condition.

The government has revised the current state budget three times.

"We hope that in the future there won't be too many revisions so that we don't confuse the public and so that the budget remains credible," Irgan said.

The majority Golkar faction said it expected a deficit budget in the next fiscal year rather than a "balanced and dynamic budget", as the government likes to call it.

Golkar estimated that tax revenues would reach Rp 110 trillion (US$14.66 billion), while routine expenditure would be Rp 135 trillion.

Development expenditure would be Rp 72 trillion, most of which would come from foreign loans, it said.

The forecasts assumed an exchange rate between Rp 7,000 and Rp 8,000 against the U.S. dollar, inflation between 20 percent and 30 percent, and oil prices of between US$11 and $12 per barrel.

The faction also forecast that economic growth would improve to between minus 5 percent and minus 1 percent, up from this year's figure of minus 13 percent.

Earlier this month, the government announced that it would draft next year's state budget assuming economic growth of between minus 1 percent and 1 percent and inflation of between 15 percent and 20 percent.

The government also said that it anticipated oil prices of between $11.5 and $12.5 per barrel, with production running at 1.52 million barrels per day.

The PPP said that these assumptions were too optimistic considering the country's current difficulties and the risk of further trouble around the time of next year's general and presidential elections.

On Wednesday, the Armed Forces faction tabled a proposal for extra government funding for security during the elections.

However, the proposal was rejected by the minority PDI faction, which urged the government to accommodate the aspirations of the general public and the students who have been staging almost daily protests instead of spending more money on security.

"That would be much healthier way forward than deploying a massive security force on the streets," the faction's spokesman Nico Daryanto said.

Late last week, the government announced plans to recruit and train 40,000 civilians to bolster security in the run up to the general election. It said the civilian militia would be funded out of the state budget. (das)