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)