State budget passed unchanged

State budget passed unchanged

JAKARTA (JP): The House of Representatives (DPR) predictably
approved the 1996/1997 state budget plan without a single change
at a plenary meeting yesterday.

However members would not comment on whether they also
approved a proposal to increase civil servants' salaries.

Sources said House members and Minister of Finance Mar'ie
Muhammad had amicably agreed to raise civil servants' pay by
around 10 percent during the four-day deliberation of the budget
plan early this month.

But they agreed not to disclose any figure, which would be
effective from the beginning of April-- the start of the fiscal
year-- because the announcement would immediately incite price in
of important commodities.

"The House members even asked the government to introduce an
automatic salary increase in coming years," a House member said.
The suggestion was turned down.

President Soeharto said during the unveiling of the state
budget in January that the government intended to raise civil
servants' pay. But he left the final decision to the House
members.

The revenues and expenditures in the 1996/97 budget plan are
set to balance at Rp 90.61 trillion (US$39.5 billion), 16 percent
higher than the Rp 78.02 trillion in the current 1995/96 budget.

Domestic revenues are expected to increase by around 18
percent to Rp 78.20 trillion while those from foreign loans are
projected to reach Rp 12.41 trillion, an increase of 5.6 percent
from the previous year's.

The government's routine expenditures will increase by 18.8
percent to Rp 56.11 trillion. The personnel expenses, part of the
routine spending, will rise by 19 percent to Rp 18.28 trillion.

The government's spending for development projects will rise
by 12.1 percent to Rp 34.50 trillion.

In his address at the House plenary session yesterday, Mar'ie
Muhammad said that the portion of the government's savings that
will be used to finance development projects is expected to
increase to 64 percent in the 1996/97 fiscal year from 62 percent
in 1995/96.

"The portion of the foreign loans would therefore be reduced
to 36 percent from 38 percent previously," he said.

He added that the country's dependence on foreign loans in
financing the development projects would be further reduced in
the future by raising domestic revenues both from taxes and non-
taxes.

He said that the tax system would be further expanded both
through the intensification of collection and the improvement of
tax regulations.

Mar'ie said that the government would also further strengthen
efforts to raise state receipts from the non-tax sector such as
service fees and the proceeds from the divestment of the
government's shares in state-owned companies.

He said that the government raised a significant amount of
money from the divestment of its shares in PT Indosat, PT Timah
and PT Telkom, which are now all listed on both domestic and
overseas exchanges.

He said that the government would also make similar
divestments through the floating of three other state-owned
companies -- Bank Negara Indonesia, PT Krakatau Steel and the
toll operator Jasa Marga, which are currently preparing to go
public.

Funds to be raised from the sale of the government's shares in
the state-owned companies would also be used to speed up the
repayment of external loans with interest rates exceeding 10
percent.

The four factions -- the Moslem-denominated United Development
Party (PPP), the Golongan Karya (Golkar) Party, the Indonesian
Democratic Party (PDI) and the Armed Forces -- asked the
government to improve its budgetary discipline in their final
submissions on the budget plan.

They also asked the government to make concerted efforts to
curb the country's growing imports and to bolster exports so that
the widening current account deficit could be reduced. (hen)