Fri, 04 May 2001

Prijadi ill, budget debate delayed

JAKARTA (JP): The government has delayed the deliberation of the revised 2001 state budget with the House of Representatives on account of the finance minister Prijadi Praptosuhardjo taking ill, according to Coordinating Minister for the Economy Rizal Ramli.

"The minister (Prijadi) is ill, so it has to be delayed," Rizal told reporters prior to a closed-door meeting with the House special team on the amendment of the central bank law.

He declined to give any further information.

Rizal said earlier on Wednesday that the government would start the deliberation process for the proposed state budget revision on Thursday.

But sources said that Prijadi had never agreed to the specific date set by Rizal, although he had earlier said that the government planned to start the deliberation process with the House sometime in the first week of this month.

Prijadi's sudden illness seems to resemble a similar move by Vice President Megawati Sukarnoputri when she claimed that she was ill and could not attend a key meeting with the embattled President Abdurrahman Wahid in the run-up to the issuance of a second censure of the President by the House on Monday over two financial scandals.

Separately, the director general of financial institutions at the finance ministry, Darmin Nasution, said on Thursday that Prijadi had to meet with the President and the Cabinet first before going to the House.

"We don't feel right going to the House if we haven't obtained approval (from the President)," Darmin said.

He added that the green light from the President was expected to be given at a cabinet meeting, probably on Saturday.

Darmin said that the proposed budget revision must be fully supported by all elements in the government to help ensure its credibility.

He pointed out, as an example, that the plan to further reduce subsidies that would result in increased fuel prices was a tough program that had to be fully supported.

The government is under pressure to obtain House approval over the budget revision as soon as possible to secure crucial International Monetary Fund loan funds.

Prijadi has said that he expected the House to approve the budget revision by the end of this month.

The proposed budget revision includes changing the exchange rate assumption to Rp 9,600 per U.S. dollar from the initial assumption of Rp 7,800 per dollar, inflation rate assumption to 9.3 percent from 7.2 percent, and the interest rate assumption for Bank Indonesia SBI notes to 15 percent from 11.5 percent, as well as cutting the economic growth projection to 3.5 percent from 5 percent.

The government has to revise the state budget mainly due to the sharp plunge in the value of the rupiah against the dollar and increasing domestic interest rates.

The drop in the rupiah's value and rising interest rates may result in the budget deficit widening to a dangerous level of up to 6 percent of gross domestic product, compared to the initial projection of 3.7 percent of GDP, unless measures are taken.

The government is proposing a fiscal adjustment package as part of the budget revision which will basically focus on boosting domestic revenue, particularly receipts from taxes and excise duties, and reducing spending.

There have been worries, however, that the government may not be able to secure House approval for the budget revision as quickly as planned given the current tug-of-war between the President and the legislature. (rei)