This fiscal policy is understandable, given the lingering debt woes in several European countries and the slowing pace of economic recovery in the US. That also is important because the credibility of a fiscal policy has a large influence on the conduct and effectiveness of monetary policy.

The key assumptions for estimating revenues and spending next year — 6.3 percent for economic growth, 5.3 percent for inflation, 6.5 percent for interest rates, Rp 9,300 rupiah rate to the dollar and US$80/barrel oil price — are by and large within the conservative range and very similar to this year.

Predictability is indeed important for efficient and effective implementation of policies and programs.

The public sector will perform better where there is stability in macro and strategic policy. Moreover, fiscal policy must take into account the need to ensure the timely flow of funds to programs and projects.

But that is precisely why we see the budget plan as a boring document, devoid of any bold initiatives to raise tax receipts and cut down on wasteful spending for fuel subsidies to allow a more expansive capital spending (investment).

Setting the target of tax revenues at only Rp 839.5 trillion ($90.26 billion based on Rp 9,300 to the dollar as the average rate assumed for next year) or up a mere 13 percent from this year shows an acute lack of resolve to broaden the taxpayer base and minimize tax evasion through more repressive measures against tax crimes. As a percentage of the GDP, those tax revenues will only be around 12 percent, far lower than the 16-20 percent range in most other ASEAN countries.

We think this is still too low, given the 50 basis point increase in economic growth to 6.3 percent expected next year. We wonder why the government, almost three years after the launching of the big bang reform in tax administration and laws, is not yet able to increase the tax ratio to at least 15 percent.

Also glaringly missing from the budget document is a government initiative to reduce fuel subsidies and the budget’s vulnerability to the gyration of oil prices. True, total spending on subsidies will decrease by 9 percent to Rp 184.8 trillion, but there is not any daring initiative to significantly lessen the economy’s addiction to subsidized fuel.

In the absence of a clear-cut energy policy and energy mix within the medium to long term, how can we expect a sizeable investment in renewable energy. Without incentives for energy efficiency, how can we expect manufacturing industries to invest in energy conservation.

With a 6.7 percent increase in total spending to Rp 1,202 trillion next year, the budget does not offer much in the way of pump priming, especially because the bulk of the spending will go to personnel costs — as the civil servants pay will be raised by 10 percent — to interest payments on foreign and domestic debts (Rp 116.5 trillion) and subsidies (Rp 184.8 trillion).

No wonder capital spending (investment) will increase to only Rp 121.7 trillion, a tiny fraction of what is actually required to accelerate the development of basic infrastructure such as power generation, roads, sea and airports.

But with such small capital spending to stimulate private investment in infrastructure, including electricity, we do not believe the foundations will be strong enough to support an economic expansion of 7.7 percent, as Yudhoyono foresees for 2014.

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