Revised budget tolerable: House member
Revised budget tolerable: House member
JAKARTA (JP): Members of the House of Representatives
yesterday expressed understanding over the government's decision
to revise the 1998/1999 draft state budget.
But the Indonesian Democratic Party (PDI) faction warned of
the adverse impacts of the government's tough economic reforms
taken to deal with the current economic crisis.
"Those weaknesses are understandable and unavoidable," said
Nico Daryanto, PDI's spokesman at the House's plenary session
held to hear the response of the House's four factions on the
change in the draft state budget.
The new draft will be further discussed by the House's
budgetary commission in the coming weeks before being approved.
Nico said his party understood that the current volatility of
the rupiah caused difficulties in drafting the budget.
He suggested the budget be periodically evaluated, focussing
on making more accurate priorities which would enhance
transparency and efficiency in the utilization of funds.
PDI said the implementation of the budget would be supported
by overseas aid, primarily from the International Monetary Fund
(IMF).
"But the PDI faction wants to remind the government to never
dance to foreign-orchestrated music while formulating basic
policies," Nico said, adding that such a submission would be
giving up the country's economic sovereignty.
The government announced the revised draft budget on Jan. 23,
after an earlier Jan. 6 budget proposal was lambasted by the
currency market due to its unrealistic assumptions and non-
adherence to the IMF recommendations.
The IMF-sponsored budget is balanced at Rp 147.22 trillion
(US$1.472 trillion), an increase of more than 45 percent from the
previous fiscal budget of Rp 132 trillion.
Questioning
The House's four factions, including the United Development
Party (PPP), the Armed Forces, and the dominant Golongan Karya
(Golkar), also questioned the new assumptions in the budget.
The new budget sets a rupiah-U.S. dollar exchange rate of Rp
5,000, economic growth at zero percent, an inflation rate of 20
percent and an average oil price of $17 per barrel.
"The PPP faction demands an explanation on what will be done
if the assumptions cannot be met," said Hamzah Haz, head of the
faction.
The PDI faction also questioned what parameters were used to
project the zero percent growth.
Nico suggested the government reconsider postponing the
repayment of the state's overseas loans by asking foreign
creditors for their understanding of the country's current
situation.
The budget allocates a total of Rp 37.8 trillion for servicing
the debts' interest rates and principals.
He also said the government should reconsider its decision to
abolish the state's monopoly on nine basic staple commodities
arguing the move would send prices skyward at the expense of low-
income citizens.
"During the current economic situation, we should continue the
monopolies... the country should not totally surrender to the
IMF," said Nico, who threatened to walk out of yesterday's
session when Minister of Finance Mar'ie Muhammad unexpectedly
left the meeting a few minutes before PDI was scheduled to
deliver its responses.
The monopolies on the basic foodstuffs is set to be abolished
by the end of March. Rice, however, will remain under the
monopoly regime.
Last month, the government agreed to some 50 points of IMF-
sponsored reform programs in return for bailout funds expected to
amount $43 billion.
On the banking reform programs, the government decided to
guarantee domestic bank obligations to creditors and debtors.
Both PDI and PPP demanded transparency in the bailout process.
The two factions also warned of the harsh implications that
might result from allowing foreign banks to freely operate in the
country.
Both the Golkar and PPP factions called on the government to
increase the salaries of government civil employees.
Despite the criticism, however, the factions generally agreed
that the country needed to take the bitter medicine in order to
get the economy back on track.
"We expect the government to consistently implement the reform
programs," said Mubha Kahar Muang, spokesperson for the Golkar
faction. (08).
Current budget -- Page 8