Smaller state budget expected
Smaller state budget expected
JAKARTA (JP): The government is preparing a state budget which
will likely be smaller than previous years as a result of the
financial crisis afflicting the country.
State Minister of National Development Planning Ginandjar
Kartasasmita revealed yesterday that the next budget would not
exceed the current 1997/1998 budget of Rp 101.1 trillion.
"We expect the forthcoming 1998/1999 budget will not increase
or will not be as big as previous years," Ginandjar said after an
hour long meeting with President Soeharto at his residence on Jl.
Cendana, Central Jakarta.
Ginandjar said Soeharto, who was accompanied by his eldest
daughter Siti Hardiyanti Rukmana, had instructed the government
to propose "a realistic and transparent" budget to the House of
Representatives in consideration of the ongoing economic crisis.
The current fiscal year will end on March 31, 1998. The new
budget is due to be presented by Soeharto to the House in the
first week of January.
"The budget draft must be as realistic and as transparent as
possible. If the situation is difficult, it must be reflected in
the budget. We do not need to cover-up the situation which can
cause misleading interpretations on our economic situation,"
Ginandjar quoted Soeharto as saying.
The current state budget stands at Rp 101.1 trillion (US$23.5
billion), up 11.6 percent from the 1996/1997 budget.
The government had projected earning Rp 15.12 trillion from
the oil and natural gas sector, and Rp 73.18 trillion from nonoil
and gas exports.
But it will be hard for the government to reach this target,
especially after the Minister of Finance Mar'ie Muhammad revealed
last month that only 26.8 percent of the target revenue from the
nonoil and gas sector was achieved.
The primary reason for a contractive budget is the plunge in
the value of the rupiah.
When the House passed the budget in February, the rupiah stood
at about 2,400 against the dollar. Now, it has dropped to about
4,300.
"We are still calculating the projection on our economic and
inflation growths... and another important parameter is the
estimated exchange rate of rupiah against the dollar," Ginandjar
said.
He said the government was doing its best to stabilize the
currency, but admitted that it would not be realistic to expect
it to go below Rp 3,000.
Ginandjar, also chairman of the National Development Planning
Board (Bappenas), said the government would continue to
prioritize poverty alleviation, the development of economic
infrastructure and the education and health sectors.
"We will also prioritize the agriculture sector, especially on
foodstuff because we must maintain our self-sufficiency in rice,"
he added.
According to Ginandjar, Soeharto believes next year's budget
will remain under the shadow of the monetary crisis and this
year's long drought.
"The President said the ongoing monetary turmoil has caused
rising unemployment, especially for unskilled workers. Therefore,
labor-intensive projects will be provided in cities and in rural
areas especially in Jakarta," said Ginandjar.
Ginandjar acknowledged that it would be more difficult for the
government to maintain its revenues from the tax sector due to
the economic slump.
He hinted that the government might use some parts of the
US$23 billion loan package from the International Monetary Fund
to compensate its declining revenue in next year's budget. (prb)