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Lawmakers divided in opinion
Lawmakers from the House of Representatives have given mixed reviews of the proposed 2016 state budget draft, signaling that the upcoming approval of the budget will entail tough talks
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awmakers from the House of Representatives have given mixed reviews of the proposed 2016 state budget draft, signaling that the upcoming approval of the budget will entail tough talks.
During a plenary session on Thursday that was attended by Finance Minister Bambang Brodjonegoro, members of the Gerindra Party ' one of the factions of the opposition coalition ' criticized the government's gross domestic product (GDP) target as being 'miniscule'.
'[Economic growth of] 5.5 percent is a miniscule target. It can be achieved without fiscal stimulus. It doesn't reflect the government's efforts, especially when the current administration's motto is 'work, work, work',' said former movie actress Rachel Maryam Sayidina, now a Gerindra politician, when she presented the party's view of the budget during the session.
Members of Gerindra also criticized the exchange rate assumption and the three-month treasury bill (SPN) rate contained in the budget. While the exchange rate assumption was set at Rp 13,400 per US dollar, the SPN rate was set at 5.5 percent.
Gerindra argued that the current exchange rate had gone beyond that assumption and that the SPN rate could not be set below Bank Indonesia's benchmark interest rate, which now hovers around 7.5 percent.
The faction lauded the President Joko 'Jokowi' Widodo administration for maintaining a focus on infrastructure development with a budget allocation of Rp 313.5 trillion (US$22.65 billion) or 14.8 percent of total state spending, but urged higher spending realization, citing this year's latest data on state spending.
The spending, according to data from the Finance Ministry's director general of treasury, only accounted for 39 percent of the 2015 state budget by the end of the first half.
Contrary to Gerindra, members of both the Prosperous Justice Party (PKS) and Hanura Party factions claimed that the GDP growth target was too optimistic and ambitious.
Abdul Fikri of the PKS said the government would have a hard time realizing the target due to the lack of clarity in its economic road map.
Meanwhile, members of the Democratic Party considered the growth target to be actually quite realistic, but it laid out a long list of prerequisites for achieving it, such as 'being creative and cooperative' in carrying out the project.
Despite the initially supportive gestures toward the budget, party members highlighted the need to bring back fuel subsidies, which the Jokowi administration had scrapped last year.
Democratic Party politician Verna Gladies Inkiriwang claimed that the hundreds of trillions of rupiah saved from the subsidy cuts had not benefited people's lives in the short or medium term.
Debates on the budget at the House were expected to result in the draft being passed into law in October.
Meanwhile, according to Moody's Investors Service, the draft budget was credit positive because it maintained a policy focus on keeping fiscal deficits low and shifting government spending to capital investments and away from subsidies.
Moody's said that the budget was based on 'relatively realistic macroeconomic assumptions'.
