JP/14/dpd
DPD proposes 'more realistic' budget to govt, House
The Jakarta Post Jakarta
The Regional Representatives Council (DPD) is urging the government to be more realistic in its assumptions for the 2005 state budget revision, and to allocate more funds for social and regional development.
In a written statement it had submitted to the House of Representatives earlier this week on the matter, the DPD recommended the government set the inflation rate at 9 percent, on the basis of a rupiah exchange rate at Rp 9,200 against the U.S. dollar and oil price of $40 per barrel.
"These figures are based on conditions during this year's first quarter," the report said.
"The rupiah has remained at the level of around Rp 9,500 a dollar, while global oil prices remain around $45 per barrel."
The Council, however, concurred with the government's estimation that the economy would be able to grow by up to 5.5 percent this year, and that the country would be able to produce an average of 1.125 million barrels of oil per day.
The government is currently in talks with the House of Representatives' Budget Commission to revise this year's state budget, taking into account the recent rise of inflation, soaring global oil prices and a weakening rupiah.
Under the Constitution, the DPD has the right to make recommendations to the House over the deliberation of any laws related to the budget, taxation policies, education and religious affairs.
The recommendations come at a time when Bank Indonesia is also seeing the rupiah exchange rate settling somewhere between Rp 9,000 and Rp 9,300 per dollar, and the inflation rate reaching 8 percent. The House's Commission VII for energy affairs had also recommended to the Budget Commission of an oil price of between $40 and $45 per barrel.
The government has upgraded the rupiah exchange rate to Rp 8,900 per dollar from a previous Rp 8,600, and the inflation rate to 7 percent from 5.5 percent.
With the assumptions it is recommending, the DPD said, the government would be able to receive additional revenue of up to Rp 54.7 trillion (some $5.7 billion) -- totaling Rp 492.8 trillion -- from an increase in oil and gas revenues.
The DPD has therefore recommended that the government increase its allocation for education, health and poverty alleviation programs. "The government should increase the Rp 4.1 trillion it has allocated for educational scholarships this year, to be able to fulfill the 20 percent budget allocation for the country's education sector as stipulated in the Constitution," the DPD said.
"The government should also adjust the budget allocation to the provinces, which is currently only at Rp 40 trillion."
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2005 Budget DPD
State Budget Revision recommendations ---------------------------------------------------------------- Economic growth (%) 5.4 5.5 5.5 Inflation (%) 5.5 7 9 Rupiah rate (Rp/$) 8,600 8,900 9,200 Oil price ($/barrel) 24 35 40 Oil production (mbpd) 1.125 1.125 1.125 ---------------------------------------------------------------- Source: Regional Representative Council