State budget draft realistic: Analysts

State budget draft realistic: Analysts

JAKARTA(JP): Noted analysts hailed as "realistic" the 2002
state budget draft delivered on Friday by President Megawati
Soekarnoputri at a plenary session of the House of Representative
(DPR).

Raden Pardede, a senior economist at Danareksa Research
Institute, said that, as a whole, the 2002 budget bill was
realistic and attainable as it contained conservative, yet wise,
basic economic assumptions.

"Generally speaking, I find the draft realistic and I give
credit to the government for taking this relatively conservative
approach," he told The Jakarta Post by phone on Friday afternoon.

"With the exception of the 5 percent economic growth and the
sharp reduction in the oil and gas output to 1.23 million barrels
per day (bpd) from 1.4 bpd in this year's budget, I endorse other
assumptions of the proposed budget such as the rate of inflation,
the interest rate of the (central bank's) SBI (promissory notes)
and the rupiah rate (against the dollar)," he said.

He dismissed the five percent economic growth as "too
ambitious" and the sharp decline in the oil and gas output as
"confusing".

The draft budget assumes a rate of inflation set at 8 percent,
the rupiah rate against the dollar at Rp 8.500 and the oil price
at US$22 per barrel.

Another analyst Bustanul Arifin of the Institute for the
Development of Economics and Finance (Indef) also admitted that
"realistic" was the right word for the 2002 January-December
budget draft.

Major international lenders for Indonesia such as the
International Monetary Fund (IMF) and the World Bank also
welcomed the proposed draft, saying that it struck the right
balance between prudence and stimulating growth.

"It's a prudent budget recognizing the importance of
stabilizing the economy and social goals," David Nellar, the
fund's senior executive in Jakarta, said on Friday, as reported
by Reuters.

The World Bank described it as "well designed", saying the
macroeconomic assumptions were generally realistic.

"We welcome the focus on reducing government debt and fuel
subsidies, while reallocating resources to priority development
programs such as basic education," said Mark Baird, World Bank
country director for Indonesia.

Bustanul shared Raden's view that the assumption of 5 percent
growth was unrealistic.

"I must say that the figure is too optimistic. It's almost
impossible. My estimation is that we could only reach growth of
4.2 percent at the highest," he said.

"But praise should be given to the government for its
willingness to allocate more funds to the education and health
sectors. The increase of 24 percent for the education sector
should be highly appreciated."

Both Bustanul and Pardede also greeted the cutting of the fuel
subsidy budget but reminded the government the subsidy cut could
place a heavy burden on the poor who are still struggling to
recover from the economic crisis.

Meanwhile, private think thank Econit, which was founded by
former Coordinating Minister for the Economy Rizal Ramli, said
the draft budget showed the government was more concerned with
the IMF's demands than with the public.

Econit said in a press release obtained by The Jakarta Post on
Friday evening that the government's prioritizing of the IMF was
indicated by the huge funds allocated for servicing the country's
foreign debt, which is up to twice the amount allocated in this
year's budget. (10)