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)