President asked to be more frugal

President asked to be more frugal

JAKARTA (JP): Finance minister Prijadi Praptosuhardjo has
asked President Abdurrahman Wahid to be more frugal, including
curtailing his penchant for overseas trips amid signs of a
greater-than-expected deficit in the 2001 state budget.

"I said (to the President), 'Pak, right now I'm monitoring the
state budget. This (the state budget) position could worsen.' So,
I asked the President to be thrifty," Prijadi told reporters on
Tuesday following a meeting with Abdurrahman at Merdeka Palace.

"Then the President replied, 'Yes, yes. I'm sorry. Well, let's
start to economize, then'," Prijadi was quoted as saying by
Antara.

When asked whether he had also suggested that the President
avoid making overseas trips, he said that if an overseas trip was
necessary it could go ahead, but it should be well-planned in
order to reduce costs.

Since assuming office in October 1999, Abdurrahman, the
country's first democratically-elected president, has made
frequent overseas trips. He has argued that the trips were
important for drumming up international support for troubled
Indonesia.

But his critics have lambasted the President for leaving the
country at crucial moments and pointed out that he would be
better off focusing on trying to resolve the various domestic
problems facing the country, including widespread social unrest
and outbreaks of deadly violence.

Abdurrahman had earlier canceled a trip to Australia scheduled
to begin on Tuesday.

Prijadi had earlier told the media that the 2001 state budget
could suffer a greater-than-expected deficit amid signs that the
budget targets could be missed, as well as the delay in the full
implementation of the planned fuel price increase.

A significantly larger deficit could trigger a second economic
crisis in the ailing country.

The 2001 state budget projects a deficit of around 3.7 percent
of gross domestic product.

But, Prijadi said that the current weakening of the rupiah
against the U.S. dollar and rising interest rates could force the
government to revise the budget.

The rupiah dropped to a 30-month low of around Rp 11,500 per
dollar last month amid domestic political uncertainty and a
standoff between the government and the International Monetary
Fund.

The rupiah ended trading late on Tuesday at Rp 10,450 per
dollar, compared to the budget assumption of Rp 7,800 per dollar.

The weakening of the local unit has prompted Bank Indonesia to
allow the benchmark interest rate on one-month SBI promissory
notes to rise to around 15.58 percent last week, compared to the
budget assumption of 11 percent.

Prijadi has said that a 1 percent increase in the SBI rate
could cause an increase of around Rp 2.1 trillion in the interest
cost of the government's bank recapitalization bonds.

The government has issued around Rp 430 trillion worth of
bonds to help finance the massive bank recapitalization program.
The budget makes provision for the interest on the bonds.

Prijadi also said that the delay in the full implementation of
the fuel price hike plan would put further pressure on the
budget.

The government initially planned to increase fuel prices in
April in a bid to reduce the government subsidy for the
commodity. But, as a result of the current political uncertainty,
the government has only raised the fuel price for industrial
users to between 50 percent and 100 percent of the market price,.
The fuel price for small companies, the public, the state
electricity utility and the public transportation sector remains
unchanged.

Prijadi confirmed on Tuesday that his office was sounding out
measures to raise domestic revenues and cut spending so as to
relieve the pressure on the state budget.

Asked about plans to seek new foreign loans at an upcoming key
donors' meeting in Jakarta, Prijadi said that the meeting would
basically review the country's performance as regards the
achievement of key economic reform targets over the past six
months.

He said that it was still not definite that the government
would ask for new loan commitments.

The country's donors are grouped in the Consultative Group on
Indonesia (CGI).

Pre-CGI meetings will be held on April 23 and April 24, to be
followed by a full CGI meeting in October or November of this
year.

At the last CGI meeting in Tokyo, the donors pledged around
US$5.2 billion in loans to Indonesia. (rei)