Fuel prices raised, spending cut

Mustaqim Adamrah ,  The Jakarta Post ,  Jakarta   |  Tue, 05/27/2008 3:16 PM  |  City

The Jakarta administration is tightening its belt by cutting a number of budget allocations in response to the fuel price increases, City Secretary Muhayat said Monday.

In a letter dated May 12, he asked all heads of working units at all levels to cut "unnecessary expenditures by 15 to 20 percent".

"All working units are required to run their programs efficiently on a limited budget," he said at City Hall.

"The administration is also deciding which programs should now be prioritized."

The administration's 2008 priority programs, which will cost Rp 3.99 trillion (US$428.11 million) in total, include the East Flood Canal project, the Mass Rapid Transit project, the normalization of rivers and the revitalization of an artificial lake and reservoir.

The priority programs also include the finishing touches on existing low-cost apartments and the construction of new units, the education operational budget and the improvement and completion of busway lanes for corridors 1 to 10.

Muhayat said the administration's plan to raise civil servant salaries might be postponed due to the fuel price increases.

"We need to review our budget and determine whether it is adequate to pay out salary increases to civil servants this year, because we failed to meet our budget target last year," he said.

He said the administration was only able to save Rp 1.3 trillion from the 2007 city budget, less than the Rp 1.8 trillion initially projected.

President Susilo Bambang Yudhoyono said in his 2007 State of the Union speech on Jan. 31 that the lowest ranking civil servants would get a 28.5 percent increase nationwide on their basic salaries, from Rp 1 million in 2006 to Rp 1.28 million for 2007.

The proposal was part of the government's plan to lift people and regions out of poverty.

As a result, the administration needs to set aside another Rp 1 trillion this year for civil servant salaries from the Rp 5.77 trillion pegged last year to Rp 6.78 trillion this year.

"Right now our budget is probably insufficient for civil servant salary increases of more than 20 percent," Muhayat said.

Besides fuel price increases, the budget efficiency plan has also been prompted by the 2008 city budget deficit.

According to the assistant to the city secretary for finance, Sukri Bey, the budget deficit has reached Rp 1.8 trillion.

As a consequence of the administration's budget efficiency plan, he said expenditure on official trips, commissions for civil servants, goods procurement, research, seminars and consultancy would have to be cut or delayed.

He said the administration was currently calculating all the cuts and would finish in June.

He also said the administration would submit the changes made to the City Council before both parties started deliberating the 2008 revised city budget.

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