State budget to be unveiled next month

JAKARTA (JP): President Soeharto will propose the 1998/1999 draft state budget to the House of Representatives on Jan. 6, a senior minister said yesterday.

Minister/State Secretary Moerdiono said the government would stick to its balanced budget principle. The budget's composition and amount would also reflect the ongoing monetary contagion.

"The President underlined that next year's budget must be realistic... where expenses are to be balanced with revenue," Moerdiono said after meeting with Soeharto at his residence on Jl. Cendana, Central Jakarta.

Soeharto summoned yesterday Coordinating Minister for Economy and Finance Saleh Afiff, State Minister of National Development Planning Ginandjar Kartasasmita, Minister of Industry and Trade Tunky Ariwibowo, Governor of Bank Indonesia J. Soedradjad Djiwandono, Minister of Finance Mar'ie Muhammad, Moerdiono, and government economic advisor Widjojo Nitisastro to his residence.

Soeharto is expected to preside over a plenary cabinet meeting on Dec. 24 to discuss the budget proposal with all economic advisors, head of state agencies and first echelon officials.

After meeting with Soeharto last week, Ginandjar said the budget would likely be smaller than previous years as a result of the financial crisis afflicting the country.

He said the budget, which would be effective beginning in April, would unlikely exceed the current 1997/1998 budget of Rp 101.1 trillion.

The 1997/1998 budget was equal to about US$42.4 billion when it was adopted by the House in February, but sharply dropped to about $23.5 billion in December. The value of the greenback was only about 2,400 in February but skyrocketed to more than Rp 5,000 this month.

"The draft budget must be as realistic and as transparent as possible," Ginandjar said.

Some government officials, who spoke on the condition of anonymity, said yesterday it was still difficult to determine the value of the dollar against the rupiah for next year's budget.

"The rupiah situation is still volatile, and we must be able to forecast the most reasonable exchange rate -- this is not an easy job," said one official.

As a part of a new three-year reform package supported by an IMF-led team and the government, Mar'ie said on Oct. 30 that the government would further trim its budget spending and that budget discipline would be improved.

The IMF has insisted that the government create a surplus in the coming budget.

"We are targeting a budget surplus of 1 percent of the gross domestic product in fiscal 1998/1999 and subsequent years," Mar'ie said.

The President pointed out to his ministers yesterday that the budget for the next fiscal year must be adjusted with the ongoing currency crisis and spending should be curbed on unnecessary projects.

"The President underlined that routine expenses would be adjusted accordingly compared to the ongoing economic situation," Moerdiono remarked. (prb)