IMF says budget revision unlikely

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.