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)