State budget is safe, says new finance minister

State budget is safe, says new finance minister

JAKARTA (JP): Newly appointed Minister of Finance Bambang
Sudibyo said on Friday that the state budget remains in a safe
position despite the delay in disbursements from the
International Monetary Fund (IMF) and World Bank (WB) loans.

Bambang denied reports that there was a deficit in the state
budget, saying about Rp 39 trillion (about US$5.5 billion) was
available in the state coffers.

"There is about Rp 17 trillion available from the surplus of
the previous fiscal year's budget and about Rp 22 trillion of
undisbursed funds (in the current budget)," he said after a
ceremony marking the official transfer of the post from his
predecessor Bambang Subianto.

The finance minister's statement contradicted the statement
made by Coordinating Minister of Economy and Finance Kwik Kian
Gie, who said the state budget for the 1999/2000 fiscal year
ending in March was in a negative position.

"I have reviewed the current budget ... and it is quite safe.
So it is not true that the budget is in a deficit," he said.

He said with the existing funds, the government would still be
able to finance routine government spending, including covering
civil servants' salaries of between Rp 3 trillion and Rp 4
trillion per month.

The ministry's director general for budget affairs, Darsjah,
supported Bambang's view, saying the existing funds were
sufficient to finance government spending until December.

He said revenues from oil and gas exports, taxes and loan
disbursements from international creditors would be able to cover
spending from January to March.

The IMF, WB and Asian Development Bank (ADB) suspended loan
disbursements to Indonesia in September after the previous B.J.
Habibie administration failed to keep its promise to
international donors by publishing the audit report on the Bank
Bali scandal.

The IMF demands the disclosure of the PwC report for the sake
of transparency.

The IMF is organizing a $43 billion bailout fund to help
finance the country's economic programs for solving the economic
crisis.

Out of the fund's total commitment of $12.3 billion, some
$9.5 billion has been released. A disbursement from the IMF would
also encourage other donors to lend money and investors to
invest.

Review

Separately, Kwik said the government and the IMF would review
the country's economic reform program following a major change in
political, social and economic conditions.

Kwik said the review in the IMF-mandated economic reform was
necessary due to those major changes.

The newly appointed coordinating minister did not say which
programs would be reviewed, but he stressed that the change would
not affect the government-sponsored bank recapitalization
program.

Kwik, once an outspoken critic of the IMF reform program, said
the review which would be discussed with IMF Asia-Pacific
director Hubert Neiss during his visit to Jakarta next week would
be a matter of adjusting some parts of the relief program to the
changes in the country's political, social and economic
landscape.

Most of the reform program agreed with the IMF and the WB
would be still in place, he said, adding that his main duty would
be to continue the implementation of the reform programs agreed
to with the IMF and WB.

He said the main priorities would be to help the unemployed
through the existing safety net program, handle malnutrition
problems, eradicate corruption as well as to seek the resumption
of the stalled loans from international creditors.

Publishing the full version of the Bank Bali report would pave
the way for the loan resumption, he said, adding the IMF would
not force the government to wait until the bank scandal was
cleared up before resuming the flow of aid it halted.

Included in the transparency requirement is allowing public
access to the full report of the independent audit into the bank
scandal by accountants PricewaterhouseCoopers (PwC), he said.

"If that is met, then it is settled and they will resume their
aid. They will not wait for the police process," Kwik said.

The Bank Bali scandal revolves around the payment of a Rp 546
billion (US$80 million at current rate) "commission" by Bank Bali
to a private firm to recover interbank loans.

The loans, which were guaranteed by the government, should
have been paid automatically without recourse to a third party.

Habibie and former government officials closely linked to the
case have flatly denied they benefited in any way from the money
paid to the private firm, PT Era Giat Prima, or that it was used
to allegedly fund Habibie's failed campaign to win a second term.
(prb/udi/hen)