RI Plans For Economic Stabilization In 2014

Jakarta, Oct 28 (Antara) - Finance Minister Chatib Basri said the government would use 2014 for economic stabilization and that improving economic fundamentals would be prioritized. In view of this, he said here on Monday that growth would be kept under six percent. "In making a policy, there are always choices that have to be made. If we choose growth, our fundamentals would not be stable, and in the mid-term, they could be disrupted. So we will focus on stability. The national budget is not for boosting growth," he said at a press conference. He said the government would impose a tight fiscal policy by maintaining the budget deficit and ensuring the current account deficit does not become wider. "The government`s priority is clear. The year 2014 will be a period for stabilization, without which the country`s economic growth would be disrupted. We are being realistic. This signal is important for the market," he remarked. Chatib noted that although economic growth has been assumed at only six percent, next year, the figure will still be the second-highest among the G20 countries or higher than that of India or Turkey. "Indonesia`s economic growth will still be number two among the G20 countries, so there will be a cushion for the decline in growth decline, but there is no room for instability. If the rupiah and yields drop, there will be a significant impact," he said. The minister pointed out that the 2014 national budget had been drafted based on considerations of the most realistic domestic and global economic conditions and their future prospects. The 2014 budget also ensures cuts in the allocations for official travels and hikes in the ceiling for prioritized spending such as for infrastructure, health facilities, and the procurement of major equipment for the defense system (alutsista). "With regard to shifts in the ceiling, it seems infrastructure, health, and alutsista will receive the most funding in addition to the self-blocking of official travel costs and consignments," he said. Some of the macro-assumptions for 2014 that have been agreed upon by the government and parliament include those made for economic growth, which is set at 6 percent; the inflation rate at 5.5 percent; the rupiah exchange rate at Rp10,500 per US dollar; and three-month treasury notes at 5.5 percent. Other assumptions include the Indonesia crude price, which is set at US$105 per barrel, with oil production of 8,870 barrels per day and gas production equivalent to 1.240 thousand barrels per day. State revenues, meanwhile, have been agreed upon at Rp1,667.1 trillion, and state spending has been fixed at Rp175.4 trillion, or 1.69 percent of the gross domestic product. Of the state revenues, income from tax is expected to reach Rp1,280.4 trillion, with income tax revenue reaching Rp586.3 trillion, value-added tax of Rp493 trillion, and excise duty of Rp116.2 trillion. State spending, meanwhile, has been set at Rp1,249.9 trillion, covering spending for goods procurement at Rp201.8 trillion, government employees` salaries at Rp263.9 trillion, capital spending at Rp205.8 trillion, and debt payments at Rp121.2 trillion.