IMF, govt to revise 2003 budget assumptions

IMF, govt to revise 2003 budget assumptions

Dadan Wijaksana
The Jakarta Post
Jakarta

A team from the International Monetary Fund (IMF) arrived here
on Friday to discuss with the government the revision of
assumptions in the 2003 state budget in the wake of the horrific
Bali bombings.

"We come here to evaluate the budget assumptions after the
Bali tragedy," IMF deputy director for the Asia Pacific Daniel
Citrin was quoted as saying by Antara.

The IMF team is scheduled to remain in Indonesia through Oct.
31.

The deadly attacks less than two weeks ago -- which left close
to 200 people dead and hundreds of others injured -- is expected
to have a significant impact on the economy, which will be felt
next year.

As such, analysts say, many assumptions in the budget made by
the government prior to the attack should be revised in view of
the possible drop in revenue.

The government has already said the Bali attack made a
revision of the budget assumptions inevitable.

"We're now finalizing a proposal to revise the assumptions in
the 2003 budget. The results will then be discussed with the
House of Representatives," Coordinating Minister for the Economy
Dorodjatun Kunjoto-Jakti said in a press release on Friday.

Officials have said the government could lose Rp 10.8 trillion
in potential tax revenue and some Rp 1.5 trillion in potential
custom revenue due to the bombing.

The draft 2003 state budget was submitted by the government to
the House in August. The House will begin its new session on Oct.
29, after a month-and-a-half recess.

In the draft budget, the government assumes 5 percent economic
growth, 8 percent inflation and an exchange rate of Rp 8,700 per
dollar.

Dorodjatun said that aside from the IMF the government had
also invited the country's major donors, such as the World Bank
and the Asian Development Bank, to discuss the budget revisions
and possible additional pledges to help minimize the impact from
Bali.

Proposals for additional loans will be presented during a
meeting with the Consultative Group on Indonesia (CGI), he added.

Elsewhere, Citrin confirmed that the IMF team would review
some of the economic reform targets stated in the letter of
intent (LoI) signed with the government.

While Indonesia has made progress in some of the reform
targets, it is still lagging behind in various others, namely the
establishment of an anticorruption commission, divestment of Bank
Danamon, privatization and the issuance of treasury (T)-bills.

Under the latest LoI, the government should achieve all of
those targets by the end of this month.

The failure to meet the targets could lead the IMF to halt its
lending programs with the government.

Indonesia and the IMF are tied to a $5 billion loan package,
under which Indonesia is required to comply with economic targets
set out by the fund.