The revised 2009 state budget is likely to be endorsed this week, providing the latest economic ammunition to cope with the global economic downturn.
The government plans Monday to incorporate in its already submitted revision to the 2009 state budget the newly drafted article 23, said Suharso Monoarfa, the House of Representatives’ budget committee vice chair, on Sunday.
Article 23 is designed to provide the government with room to make quick adjustments within the budget to balance global financial volatility or deepening economic stagnation.
“The budget committee, I expect, will create two working committees after the House’s plenary session Tuesday: one to discuss budget assumptions, and one to discuss the economic stimulus,” he said.
He added the revised budget should be wrapped up by Wednesday or Thursday.
Whereas the government’s new budget assumptions were relatively acceptable, Suharso said, the economic stimulus package should go through intensive discussions in the House.
“Our question is simple: Will the stimulus be effective? If we see the stimulus amount and the spending allocation, will the stimulus create enough of a positive impact to offset the negative factors hurting our economy?”
He cited the government’s plan to provide Rp 10.2 trillion for infrastructure spending.
“Will the infrastructure projects absorb unemployment or just benefit the players?”
Those questions demand proper answers, he added.
The government plans to add Rp 15 trillion in economic stimulus to the revised budget, on top of stimulus-like allocations already stipulated before the revision.
The Rp 15 trillion includes Rp 10.2 trillion in infrastructure spending, Rp 2.8 trillion in diesel subsidies, Rp 1.4 trillion in electricity tariff discounts and Rp 0.6 trillion in rural people empowerment program.
The Finance Ministry has said the economic stimulus package amounts to Rp 71.3 trillion.
The remaining Rp 56.3 trillion is already stated in the budget: Rp 43 trillion in tax savings due to the new tax rates set in the new income tax law endorsed late last year, and Rp 13.3 trillion in waived taxes and import duties on households and businesses.
Once the revised budget is approved, the government plans to issue dollar-denominated global medium-term notes to foreign investors. The government has just wrapped up its road show to 120 of the world’s largest investors.
said the note may mature in either five or 10 years, with yields benchmarked to the government’s 10-year bonds.
Suharso said the government would have no trouble securing Rp 129.5 trillion in budget deficit, or 2.5 percent of the budget, as the government had Rp 51.3 trillion in unused funds from the previous year’s budget.
Also on Sunday, Finance Minister Sri Mulyani Indrawati announced the government would maintain the price of subsidized fuels to safeguard the budget.
“In 2009, with the world economic crisis still happening, the government thinks it is important to stabilize prices so the economy will not be obstructed,” she said.
“The government is maintaining the price of subsidized fuels not to gain profit but to protect the economy; we can weather highly volatile oil prices.”
Mulyani said if the government profited from the price gap between international fuels and domestic subsidized fuels, the money would become nontax state revenue.