The House budget committee’s meeting with the government over the revision of the state budget reached a stalemate on Thursday, with lawmakers claiming that government “mismanagement” caused an overhaul of macroeconomic assumptions.
“It has been merely three months since we approved [the 2012 state budget] and we have to make significant and thorough changes already,” Tamsil Linrung, the deputy chairman of the House budget committee from Prosperous Justice Party (PKS), said during the hearing, which was attended by representatives from the Finance Ministry, Bank Indonesia, the National Development Planning Agency (Bappenas) and the Central Statistics Agency (BPS).
“If the changes are based on external factors, then we could understand. But the problem here is the changes look to be caused not by external factors only, but also internal problems, such as the government’s mismanagement,” Tamsil said, citing that state-owned electricity company PT PLN saw electricity subsidies double to Rp 89.55 trillion, from Rp 40.45 trillion in the previous budget.
The government is proposing several alterations in macroeconomic indicators for the state budget. It proposes to lower the yearly economic-growth forecast from 6.7 percent to 6.5 percent, increase the annual inflation target from 5.3 percent to 7 percent and change the official exchange rate to Rp 9,000, from Rp 8,800, against the US dollar.
The proposed revisions will see the price of Indonesian crude oil change to US$105 per barrel, from $90 per barrel, and an oil production target of 930,000 barrels per day (bpd), down from 950,000 bpd.
The substantial rise of global oil prices and the economic slowdown in United States and Europe are among the reasons behind the revision, Finance Ministry acting chief of fiscal policy Bambang Brodjonegoro told lawmakers during the hearing.
Bambang, however, acknowledged government mismanagement had been the major factor behind the overhaul in the state budget’s macroeconomic assumptions.
“We certainly have an internal problem on why the electricity subsidy could soar and our oil production could not achieve the estimated targets,” Bambang said, adding that the government, through the state-owned enterprises minister, would conduct internal evaluations on the matter.
The revision of macroeconomic assumptions in the state budget was imperative to keep the country’s budget deficit below the permissible level of 2.5 percent of gross domestic product (GDP), Bambang told lawmakers at the end of the hearing, which was adjourned until Friday.
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