Moderate rise in state budget still feasible: House members
Moderate rise in state budget still feasible: House members
JAKARTA (JP): A moderate 15 to 20 percent rise in the 1995-96
state budget is still feasible despite the government's grim
outlook on domestic resources, say members of the Budgetary
Commission of the House of Representatives (DPR).
Speaking at the conclusion of a four-day preliminary
deliberation on the state budget for 1995-96, all of the
commission's four factions agreed that there is still much room
for budget expansion.
Factions of the ruling Golongan Karya (Golkar) and Armed
Forces believe that prices of crude oil will reach an average of
US$17 per barrel next year, even though Iraq could re-enter the
world's oil market during that period.
"The price of natural gas, which is related to developments in
crude oil prices, will automatically be boosted," R.P. Soebagio,
spokesman for the Golkar faction, said about the reason behind
his faction's optimism.
The government's tax receipts from the oil and gas sector are
projected to reach Rp 12.85 trillion (US$5.9 billion) this fiscal
year, accounting for around 18.5 percent of the total 1994-95
budget. The receipt projection is calculated on an average price
of $16 per barrel.
Minister of Finance Mar'ie Muhammad said earlier that the
1995-96 budget would be kept at the same level as that for this
fiscal year not only due to uncertainties in the world's oil
market but also because of the expected flat growth in receipts
from non-oil sectors.
Tax
He said that the government's decision to lower income tax
rates beginning next year would limit the growth of the tax
receipts outside the oil and gas sector, which are estimated to
reach Rp 46.88 trillion in the present fiscal year.
The receipts from non-oil sectors have become more important
in the last five years not only due to the government's
determination to reduce foreign debts but also due to the
country's declining oil reserves. Indonesia's oil production --
including condensate -- has reached its maximum level of 1.5
million barrels per day.
The factions of Golkar, the Armed Forces and the Moslem-
dominated United Development Party (PPP) feel that an increase of
around 15 percent is still possible. In addition, the
government's commitment to stronger law enforcement and tax
expansion should further raise the tax coverage ratio, thereby
offsetting the negative impact of the reduction of the income tax
tariffs.
The Indonesian Democratic Party (PDI) said that the rise
should be around 20 percent as the increase of around 10 percent
would cover only the losses caused by inflation, which is not
expected to surpass nine percent.
The PPP and PDI factions, however, warned the government to
work harder to improve the business climate and also to encourage
more foreign and local investments.
The two factions believe the role of the private sector will
be more dominant in the country's economy as a larger portion of
the state budget will be used mainly for the government's routine
expenditures.
Sa'di Zen Noor, spokesman for the PPP faction, said that the
government should watch the inflow of foreign debts more
carefully, both for government agencies and the private sector.
Indonesia's external debts have reached a stunning level of
$93 billion, making the country the third largest borrower in the
world. Around 60 percent of the total debts are owed by the
government and the remaining 40 percent by the private sector.
Sa'di said that the government should restrict private
borrowing because a further increase would hurt the whole
economy.
The government's foreign debt reached a total of $56.84
billion as of August this year, $7.31 billion (around 12.9
percent) coming from the United States, $25.23 billion (44.4
percent) from Japan, $2.93 billion (5.2 percent) from Germany,
$10.08 billion (17.7 percent) from the World Bank, $4.38 billion
(around 7.7 percent) from the Asian Development Bank (ADB) and
the remaining 6.9 billion (12.1 percent) from other financial
institutions and donor countries.(hen)