Revised budget sees "cooking oil subsidy, bureaucracy fix funds"

JAKARTA (JP): The House of Representatives approved Tuesday a revision on the 2007 budget, which saw a downsizing in both government revenues and spendings, a wider deficit, additional funds for a "bureaucracy reform" program, and a new "cooking oil subsidy".

The subsidy intended to protect poor households from a lately increase in cooking oil prices will amount to Rp 325 billion (US$36 million), while the funds to help fix up the government's bureaucracy --mostly in the form of salary pay raises at the Finance Ministry-- will come to Rp 1.46 trillion.

The revised budget also saw higher subsidies for the power sector at Rp 32.4 trillion, but lower fuel subsidies Rp 55.6 trillion.

Legislators agreed in a plenary session to vote on the government's proposed half-year budget revision that the two new allocations will be included in this year's total government expenditures, which saw a 1.4 percent cut to only Rp 752.4 trillion (US$83 billion).

Total state revenues being revised down even more by 4 percent to Rp 694.1 trillion will however widen the budget deficit to Rp 58.3 trillion (or 1.5 percent of the gross domestic product (GDP), as compared to its initial Rp 40.5 trillion (1.1 percent) estimate.

The lower revenues will mainly be the result of a shortfall in tax collection, as several macroeconomic assumptions used in the budget had to be adjusted according to the latest development as well.

The 2007 revised budget still sees Indonesia's economy being able to grow by 6.3 percent, but to a lower GDP of Rp 3,761 trillion.

All of the House's ten factions approved the budget revision, but attached stern notes on it, including the Budget Committee, which had deliberated the revisions with the Finance Ministry.

"This year's 6.3 growth should be of higher quality, in the sense that it should create at least 10.7 million new jobs, and be built on a 3.3 percent growth in the agriculture sector and a 8.5 percent growth in the manufacturing industry," Budget Committee chairman Emir Moeis said. (Urip Hudiono/**)