DESPITE DEFICIT, RP45 TRILLION OF BUDGETS REMAIN UNSPENT

By Andi Abdussalam

Jakarta, Dec 12 (ANTARA) - The steep decline in the world crude price from US$147 a barrel in July 2008 to below US$50 in December has cut the state budget deficit from Rp94.3 trillion in the 2008 revised state budget to about Rp50 to Rp70 trillion.

        If only the government were able to predict the world crude price and calculate central and regional governments' expenditures realistically, it might not have to set a deficit in its 2008 budget.

        Approaching the year end, it turns out that about Rp45 trillion of the regional budgets for all regions in Indonesia remain unspent. This is regretted by Finance Minister Sri Mulyani Indrawati.

        "Many regions could not absorb the whole of their regional budgets (APBD) so that there are unspent budgets amounting to Rp45 trillion," the finance minister said when opening a "Fiscal Decentralization Policy 2008 Forum" at the Aston Atrium Hotel on Thursday.

        In the revised 2008 state budget, the government had set the budget deficit at 2.1 percent of GDP or Rp94.3 trillion with state expenditures estimated at Rp989.3 trillion and state revenues and grants at Rp895 trillion.

        The government estimates the deficit in the 2008 state budget will be lower than 1.9 percent of the country's gross domestic product (GDP) due in part to a recent drop in global crude prices.

        Virtually, with the crude price drop, the amount of deficit in the state budget for 2008 should have been very small. After all, unspent budgets (SILPA) amount to Rp45 trillion.

        Finance Minister Mulyani regretted the fact that the regional budgets were not absorbed maximally while there was a relatively big deficit in the state budget which reached Rp50 to Rp70 trillion.

        "The deficit means expenditures exceed revenues. Some of the budgets for expenditures were transferred to the regions so that we hope the regions will use them maximally," the minister said.

        Previously, the director general for financial balance of the Ministry of Finance, Mardiasmo estimated that the absorption of budgets transferred to the regions from the 2008 revised budget would reach 95 percent of the total funds of Rp292.4 trillion.

        "We hope that with 95 percent, the absorption this year will increase from that last year, because the funds for Aceh special autonomous region for example has spent 100 percent, and now we are waiting for a report from Papua province on its spending. In the meantime the public allocation funds (DAU) have also been absorbed 100 percent," he said.

        He said that the absorption realization of transferred funds to the regions up to December 9, 2008 had reached about 89 percent. The ceiling of transferred funds to the regions in the 2008 revised budget were recorded at Rp292.4 trillion, consisting of financial balance funds worth Rp278.44 trillion and special autonomous and adjustment funds amounting to Rp13.99 trillion.

        The financial balance funds consisted of Rp179.51 trillion in DAU, Rp77.73 trillion in profit-sharing funds (DBH) and Rp21.20 trillion in special allocation fund scheme (DAK).

        Mardiasmo said that the DAU funds had been distributed 100 percent to the regions, among others for the educational sector while the DBH funds were still waiting for disbursement.

        Although the amount of unspent regional budgets reaches Rp45 trillion this year, the government has no plan to cut its expenditures next year. After all, it is expected that the impact of global financial crisis will begin to be felt in 2009.

        "We are not going to cut the budget as we did last year. Cuts in spending will only be made as a last resort," the finance minister said.

        She said budget cuts or changing the budgets of ministries / government institutions and the regions would only disturb the absorption of budgets in general.

        "We fear that budget cuts will slow budget spending as has happened so far. So, unless absolutely necessary, we will not cut the budget," she added.

        The minister said that new and effective programs were really needed to prevent layoffs or to create new job opportunities for laid off or new workers whose number continued to increase annually by about two million.

        Mulyani said that the 2009 budget included various programs designed to anticipate layoffs, such as the smallholder's credit scheme (KUR) and the national program for people's empowerment (PNPM).

        "Workers' layoffs are likely to happen. So, we have included KUR and PNPM programs in the state budget. We hope it will at least help if layoffs take place or create new job opportunities," the minister said.

        She admitted that the inclusion of priority programs in the state budget for 2009 could cause a bigger deficit in the 2009 budget than those in 2008.

        Citing an example, the minister mentioned the deficit in the revised 2008 budget which was set at 2.1 percent of Gross Domestic Product but its realization was predicted to be one percent only.

        "From the receipt aspect, if the economic activities decline, the revenue target could also decline and thus it will automatically generate bigger deficit," she said.  (T.A014/A/HAJM/19:45/a014) 12-12-2008 19:55:24