Prijadi asks for fast-track approval for revised budget

JAKARTA (JP): Finance minister Prijadi Praptosuhardjo appealed on Monday to the House of Representatives to fast-track the process of approving the government-proposed revision of the 2001 state budget.

Prijadi said that immediate approval of the revised budget was crucial to obtaining the financial support of international lenders and helping to revive investor confidence.

"We need a speedy process ... We're in a bind here," he told reporters following a closed-door consultation meeting with the House state budget committee.

Prijadi said that the government would send a letter to House Speaker Akbar Tandjung on Tuesday to formally request speedy approval for the revised budget.

He said that the letter would be accompanied by a draft of the revised budget.

Separately, head of the House budget committee Abdullah Zainie said that it would be up to the House leaders to decide whether the deliberation process for the draft revised budget would be fast-tracked or would be carried out in accordance with the normal mechanism.

"The House leadership will decide on the mechanism," he asserted.

Abdullah said that the fast-track mechanism would only take two weeks from start to finish, while the normal process could take three weeks or even more.

The International Monetary Fund has said that it would only agree to resume talks with the government over the disbursement of its loan to the country after the House had approved the revised state budget.

Support from the IMF is crucial for the country in its efforts to obtain financial support from other international lenders, including the Paris Club of creditor nations and the World Bank, and also to help revive investor confidence.

The government has been forced to revise the current January- December state budget following a sharp plunge in the value of the rupiah against the U.S. dollar and rising domestic interest rates.

The revised state budget includes changes to the macroeconomic assumptions employed in the original budget.

The revised budget also includes fiscal adjustment measures aimed at limiting the budget deficit to around 3.8 percent of gross domestic product (GDP). The rupiah's current weakness and rising interest rates could widen the deficit this year to a dangerous level of 6 percent of GDP.

The government's fiscal adjustment package basically focuses on cutting back on government spending and raising more domestic revenue.

The government has announced that it plans to raise fuel prices by an average of 30 percent and electricity charges by 20 percent next month to reduce spending on subsidies.

The government also plans to raise valued added tax to 12.5 percent from the current level of 10 percent.

Under the revised budget, domestic revenue is expected to increase to Rp 284.72 trillion, compared to the initial projection of Rp 263.23 trillion, while expenditure will grow to Rp 341.06 trillion from Rp 315.75 trillion.

Proceeds from the privatization of state companies and the sale of assets held by the Indonesian Bank Restructuring Agency (IBRA) are to be maintained at Rp 6.5 trillion and Rp 27 trillion respectively, but the government will also issue bonds worth around Rp 3 trillion to the wealthier provinces to help finance the budget deficit.

Elsewhere, Prijadi said that the government had decided to delay plans to issue hundreds of millions of dollars worth of bonds backed by gas sales to Singapore following protests from most of the country's creditors and the IMF.

The IMF said last week that in addition to the approval of the revised budget, the Fund would also make its next loan disbursement contingent on the government canceling the bond plan and following the advice of an international panel regarding the amendment of the Bank Indonesia law. (rei)