Soeharto calls for austerity

Soeharto calls for austerity

JAKARTA (JP): President Soeharto reaffirmed on Tuesday the
urgency of maintaining cautious fiscal and monetary policies,
austerity, control of foreign borrowings as well as a more
efficient and clean bureaucracy.

The President said at a year-end cabinet meeting that the
business climate should be improved through new deregulation
measures and bureaucratic reform.

"The President also instructed that budgetary discipline be
maintained and the accounts of state finances be kept in order,"
Minister of Information Harmoko told reporters after the cabinet
session.

The meeting, held one week earlier than usual, discussed the
latest preparations for the 1997/98 state budget, the draft of
which will be unveiled by the President to the House of
Representatives on Jan. 6.

Harmoko said Soeharto asked the monetary authorities to
maintain cautious fiscal and monetary policies in order to curb
inflation, prevent the economy from overheating and to check the
current account deficit at a manageable level.

The meeting was also attended by Vice President Try Sutrisno,
ministers, Chairman of the Supreme Advisory Council Sudomo,
Chairman of the Supreme Audit Agency J.B. Sumarlin and key
ministry officials.

The President, Harmoko said, instructed the coordinating
minister for economic and financial affairs to prepare further
deregulation measures and bureaucratic reforms.

"Red tape should be abolished, licensing and customs
procedures should be simplified and public services should be
improved," Harmoko quoted Soeharto as telling his cabinet.

All these measures, according to the President, are needed to
encourage investment, increase employment and productivity as
well as strengthen the competitive edge of Indonesian products on
the international market.

Most government and private sector economists are bullish
about the economic outlook next year, expecting the gross
domestic product (GDP) to grow at least 7 percent, against an
estimated 7.5 percent this year.

They expressed great concern, however, with the widening
deficit in the current account of the balance of payments which
has approached 4 percent of the GDP, or 1.5 percentage points
higher than the level the government considers comfortable.

The President also asked the ministers to see to it that
investment ventures are not hindered by inadequate infrastructure
in the areas of ports, electricity, telecommunications and
transportation.

He asked the Monitoring Team of Overseas Commercial Borrowing
to properly observe the ceilings on foreign borrowings and to
ensure that export credits be used only to import capital goods
which are not yet produced locally.

The President again warned the ministries not to use funds
from state companies to finance their operating expenditures or
development projects.

He recalled the successful flotations of several state
companies on international stock exchanges and asked the
ministers concerned to prepare more state firms for initial
public offerings overseas.

The President asked his ministers to properly observe
austerity, cut down on ceremonies and big meetings and limit
traveling to only the most essential trips.

He called for special attention to the management of the
balance of payments and to the private sector's foreign
borrowings, notably short-term debts.

Soeharto, according to Harmoko, also instructed the provincial
administrations to increase local revenues without imposing
additional burdens on local people and businesses.

The President reaffirmed the importance of built-in
supervision in all government agencies.

"Ministers and heads of other government institutions should
act firmly and immediately whenever they find any tendencies of
malfeasance and the abuse of power," Harmoko quoted the President
as saying at the cabinet session. (vin)