IMF says budget revision unlikely
Berni K Moestafa, The Jakarta Post, Jakarta
The International Monetary Fund (IMF) said it was unlikely the government would need to revise its 2001 state budget assumptions over concern a downturn in the global economy could jeopardize revenue targets.
Daniel Citrin, who leads a visiting IMF team to Jakarta, said on Thursday he saw no need for the government to revise its budget assumptions for this year.
"I don't see why the government should not meet the targets," he told reporters at the Ministry of Finance.
The IMF team arrived on Thursday in Jakarta for a five day visit. Citrin said it was part of a routine meeting with the government to review progress in its budget performance.
"We're coming here to hear from them (the government) how they're doing," Citrin explained.
He said the team would review the latest situation affecting the state budget.
Since the IMF team's last visit to Jakarta in August, a sharp plunge in the global economic outlook has renewed worries over Indonesia's revenue targets.
The new threats came at a time, when the government has just began to regain foreign confidence in this country.
Foreign investors virtually avoided Indonesia throughout the first half of this year, spooked by political instability and the country's inability to work with the IMF.
The absence of fresh capital had turned budget assumptions sour, forcing the government to revise them downwards in July.
But August's signing of a US$400 million lending agreement with the IMF, has paved the way for foreign lenders to restore ties with Indonesia.
This should have brought much needed foreign investment into the country .
Analysts however warned that since last month's terrorist attack on the U.S., investment firms there had slammed shut their doors for emerging markets.
State Minister of State Enterprises, Laksamana Sukardi acknowledged this situation, but hoped investment from neighboring countries would continue to flow in.
Exports are also seen declining as a consequence of the global economy teetering on recession.
Exports represent one of Indonesia's two recent economic growth engines, along with strong consumer spending.
The latter could also tumble; if a drop in exports led to mass layoffs that would undermine consumer confidence.
Adding to the problem is the return of security concerns caused by rising anti-American sentiment.
Radical groups threaten to expel U.S citizens, should the country attack Afghanistan for failing to hand over alleged terrorist Osama Bin Laden.
Another revenue source seen at risk is that of asset sales and privatization.
With less then three months to the year's end, proceeds from the privatization program have come to nothing so far.
A deal to sell state-owned cement company PT Semen Gresik to a Mexican investor faced resistance from regions rejecting foreign control.
This has put at risk an income of US$520 million, or almost 80 percent of this year's privatization target.
Questions also linger over the government's commitment to divest a 51 percent stake in PT Bank Central Asia (BCA) by this year as promised to the IMF.
The Indonesian Bank Restructuring Agency (IBRA), which is in charge of BCA's divestment, has split the sales in two without attaching a timetable to the sale. IBRA refused to confirm it would complete the sale this year.
Last year, the government's failure to sell a stake in BCA on time, prompted the IMF to suspend its loan program to Indonesia.