Rizal pledges to carry out 2001 state budget measures

Rizal pledges to carry out 2001 state budget measures

JAKARTA (JP): Newly appointed Finance Minister Rizal Ramli
pledged on Wednesday in a meeting with the House of
Representatives state budget task force to carry out the budget
measures agreed to last week between the former finance minister
and the task force.

Rizal also anticipated the current debate over the revised
2001 state budget could be completed shortly.

"I will support all the things which have been agreed to," he
told legislators in his first meeting with the House state budget
task force.

Rizal was named as the new finance minister on Tuesday by
President Abdurrahman Wahid in a reshuffle of the economic
ministers, replacing Prijadi Praptosuhardjo. Rizal was previously
the coordinating minister for the economy, a post now held by
Burhanuddin Abdullah, previously a deputy governor of Bank
Indonesia.

Prijadi last week reached an agreement with the House budget
task force to increase fuel prices by an average of 30 percent on
Friday, and to raise electricity rates by an average of 17.47
percent early next month.

The difficult measures are part of efforts to help maintain
the 2001 state budget deficit at a reasonable level of around 3.8
percent of gross domestic product (GDP).

Other crucial measures that have yet to be agreed upon with
the House include plans to raise value added tax (VAT) to 12.5
percent from 10 percent, and to issue around Rp 2.9 trillion
worth of deficit bonds to wealthier provinces.

The recent plunge in the value of the rupiah and rising
domestic interest rates has threatened the budget deficit which
could widen to a dangerous level of 6 percent of GDP.

Separately, the International Monetary Fund (IMF) urged the
new finance minister on Wednesday to forge ahead with the revised
2001 state budget, a crucial factor to improve relations with the
IMF.

"Pushing Prijadi's plan through is an important aspect of the
agreement with the Fund," IMF representative in Jakarta John
Dodsworth told Reuters.

"We are very happy with the government's proposal to
parliament for the budget so we hope that within the new team,
that proposal will be carried through quickly," Dodsworth added.

The House is expected to complete the deliberation over the
budget revision on Friday, which is expected to prompt the IMF to
send its review team to Jakarta later this month.

The IMF, which is providing a multibillion dollar bailout loan
to the country, delayed the disbursement of its next loan tranche
late last year due to signs that the government was wavering in
the implementation of agreed economic reforms.

The arrival of the IMF mission could pave the way for the
disbursement of the loan, seen as a crucial factor to help revive
investor confidence and for other multilateral lenders to provide
their financial support to the current budget.

The budget revision includes changes in the various
macroeconomic assumptions. The exchange rate of the rupiah has
been revised to Rp 9,600 per U.S. dollar (from RP 7,800 per
dollar under the original budget plan approved by the House in
January), inflation rate at 9.3 percent (formerly 7.2 percent),
economic growth 3.5 percent (formerly 5 percent), and interest
rate of Bank Indonesia 3-month SBI promissory notes at 15 percent
(formerly 11.5 percent).

Separately, Rizal said in a press statement that the
government would soon announce measures to help ease the burden
on the lower-income groups adversely affected by the increase in
fuel prices and electricity rates. (rei)