Sumitro criticizes govt over budget inconsistency

Sumitro criticizes govt over budget inconsistency

JAKARTA (JP): Indonesia's most senior economist Sumitro
Djojohadikusumo yesterday criticized the inconsistent way that
the government has been implementing the balanced budget system.

"The balanced budget should be reestablished because the
budgetary procedures are getting more ambiguous," he said.

Sumitro said state budgets no longer followed the principle of
balanced accounts because a large amount of public expenditure
was being made outside of state budgets.

The economist was speaking at a seminar at Atmajaya
University. The seminar was one of the events organized by the
university to celebrate the 70th birthday of Frans Seda, a senior
minister in the early years of President Soeharto's
administration.

Sumitro said that since a large amount of the funds that have
been collected by the government were unaccounted for in the
state budget, a significant portion of public expenditure was
beyond the control of the House of Representatives.

"Where does the government put the funds raised from forest
concessionaires," he asked rhetorically at the meeting which
featured senior economists M. Sadli and Subroto of Indonesia,
H.W. Arndt of Australia and Kemal Siber, a former executive of
the International Monetary Fund in Indonesia in 1966 to 1970, as
panelists.

The government collects billions of rupiah in forestry
royalties every year but most of the funds are used for out-of-
budget expenditure.

The state-owned company IPTN has borrowed some of the forestry
funds to finance its aircraft manufacturing program.

"Non-budgetary spending should be avoided in the future,"
Sumitro said.

Sumitro was a guest, not a panelist, at the seminar but he was
asked by its chairman, Rizal Ramli, to come forward to answer
some questions raised from the floor.

Ben Mboi, a former governor of an East Nusa Tenggara
province, asked the panelists on the difference between
Widjojonomics and Habibienomics.

Subroto, a former minister of mines and energy and a former
secretary general of the Organization of Petroleum Exporting
Countries (OPEC) replied even though the other panelists would
not discuss the issue.

Subroto said the economic development concept used by Widjojo
Nitisastro, the main architect of Indonesia's economy from the
late 1960s to the late 1980s, was wholly based on basic economic
theory. Whereas, he said, the concept favored by B.J. Habibie,
the state minister of research and technology, emphasized
applications of high technology.

Subroto supported Habibie's concept, arguing that the use of
high technology was essential in meeting rapid changes in world
economics.

Sumitro, however, argued that technology should be tailored to
optimally develop the country's natural resources.

The technology that most optimally develops natural resources
is the most effective technology for solving the country's
unemployment problem, Sumitro said.

"Widjojo made a clear choice and set up the right priority
scale in the development plan to cope with prevailing economic
problems. This kind of concept is most relevant in the current
situation," Sumitro said.

Last year Sumitro sharply criticized Habibie's statement on
competitive advantages versus comparative advantages. (hen)

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