RI targets 1.5% surplus budget by 2004
RI targets 1.5% surplus budget by 2004
The Jakarta Post
Jakarta
The government aims to pull its budget from a chronic deficit
into surplus by 2004, betting on an ambitious boost in economic
growth and tax revenue, according to the latest slew of economic
assumptions released on Tuesday.
Government data shows it targeting a state budget surplus of
1.5 percent of gross domestic product (GDP) by 2004.
That compares with this year's targeted budget deficit of 2.5
percent of GDP, or around Rp 42 trillion (US$4.2 billion).
Underlying the surplus target is a set of economic indicators
the government hopes to meet, starting from 2000.
A key indicator that will determine whether or not the budget
surplus can be achieved is economic growth.
According to the government, the economy should have grown by
4 percent to 5 percent in 2000. With growth of 4.8 percent that
year the target was reached, but with 3.32 percent the year
after, it fell short of the targeted 4.5 percent.
In the following years, the economy must achieve a growth rate
of 5 percent to 6 percent in 2002, 6 percent to 7 percent in
2003, and another 6 percent to 7 percent in 2004.
That target now looks difficult to achieve, with the still-
sluggish global economy stacked against it.
There is some faint hope of a turnaround, but analysts said a
rebound would unlikely come soon enough to give the economy a
significant boost this year.
Until then export revenues would hardly drive the economy
while investment was also nowhere close to picking up.
Tax revenues come hand-in-hand with economic growth and over
the next three years the government hopes to expand its tax ratio
to 16 percent from 12 percent currently. The ratio compares a
country's tax revenue with its population size.
Raising state revenue to generate a budget surplus also
requires the government remove obstacles that have bogged down
the economic recovery so far.
The country's banking sector is moving too slowly toward
recovery, casting a pall over manufacturers in need of working
capital.
Elsewhere, a huge portion of Indonesia's economic potential is
locked inside the Indonesian Bank Restructuring Agency (IBRA),
which took over assets from ailing banks during the 1997
financial crisis.
Getting these assets back to work in the hands of the private
sector is the key to generating economic growth.
To achieve a budget surplus, the government is also slashing
spending, with cuts in energy subsidies leading the way.