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udging by the role of the state budget as a communication system to convey signals about behavior, prices, priorities, intentions and commitments, the 2013 spending plan the government proposed to the House of Representatives on Thursday will most likely be business as usual.

President Susilo Bambang Yudhoyono said all the right words, calling on the nation to brace for the likelihood of worsening global economic uncertainty. He pointed out the urgent need to cut fuel subsidies, the vital roles of infrastructure development and efficient investment licensing and the need to strengthen the drive against corruption.

But we did not see any new evidence to convince us that this time, he really meant business in terms of the pledges he has made over the past few years, nor did he show any sense of urgency in asserting his leadership to push through all these badly needed measures.

He said capital spending for infrastructure would be increased by 15 percent to Rp 193.8 trillion (US$20.35 billion) and an interministerial task force had been set up to speed up budget execution. But these commitments seem empty, as we do not see any new concrete policy measures to accelerate budget disbursements.

In fact, the task force he referred to in his budgetary speech on Thursday evening was actually established last year, yet realized capital expenditures in the first half of this year amounted to less than 20 percent of the budgeted sum due to bureaucratic inertia and corrupt House members who demanded bribes for approving budget spending authorization.

Unrealized budget appropriations cause monetary contraction, decrease liquidity in the economy and consequently slow down the pace of economic growth because government revenues are derived from tax collection, the sales of government bonds and dividends from state companies.

The state budget principle dictates that the total amount of money the government spends should be closely aligned to what is affordable — not only in the annual budget, but also over the medium term — and such spending should be appropriately allocated to match policy priorities.

Set against this principle, the government plan to increase energy subsidies next year by more than 25 percent to Rp 275 trillion is entirely misguided, not only because the bulk of the subsidy will be enjoyed by private car owners. Such wasteful spending of taxpayers’ money will also kill the incentives for energy efficiency and conservation and renewable energy development.

The Rp 1,658 trillion total spending proposed for next year is nominally 7 percent bigger than this year’s budget, but its impact on growth generation will be rather negligible because subsidies, personnel costs, debt interest payments and amortization and other routine expenditures will take up almost 80 percent of the total budget.

Businesses may be roiled by the government’s overly optimistic view of setting next year’s economic growth target at 6.8 percent — against 6.5 percent last year and an estimated 6.3 percent this year — especially if that growth projection will be used as the basis for setting tax revenue targets.

For sure, most natural resource-based companies will likely book smaller profits this year due to the fall in commodity prices, which may even worsen next year as the European economy is predicted to contract and the US economy continues its slump.

In coping with all this uncertainty and its big downside risks, the government must do something decisive, lest the market lose confidence in its policy-making capability.

Unfortunately, the signs of declining market confidence seem to already have become increasingly evident, as seen in the 11 percent depreciation of the rupiah over the past year to this month, making it one of the worst-performing currencies in Asia despite the upgrading of the country’s sovereign-risk rating to investment grade last December.