Wednesday, January 14, 2009

Revised again

Minister Sri Mulyani has announced the revision made to the 2009 state budget (Kompas, 14/1/2009). Assumptions now are: growth 4.5-5.5, world oil 45, inflation 6.2, SBI 7.5, oil lifting 960,000. Particularly worrying is the world oil assumption. In the earlier budget it was assumed 80, fair enough. But now, as if the price risk has reduced (it has not), they cut it to 45. Add to that government decision to make further cut to fuel price to Rp 4,500. This price is said to bear no subsidy. But, and here's a political manouvre, when the price rises to Rp 6,000, they will give back the subsidy.

Furthermore, the budget deficit is set at 2.5, up from 1 in the earlier version. You might expect bigger stimulus. But not entirely true, as it is the revenue that goes down (Rp 985.7 trillion to Rp 877.7 trillion), not the expenditure goes up (stays at Rp. 1,037.1 trillion). The reduction in revenue is due to lower tax and non-tax revenues.

However, the Minister said that fiscal stimulus will be increased to Rp 15 trillion (up from Rp 12.5 trillion). I'm not very clear now where that number came from.

A good thing, the government will not give stimulus for industry materials (alas, still give it to finished goods). I'd rather see stimulus goes directly to (esp the poor) consumers.

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