Rp 51.3t of unspents funds to cushion economic slump

Aditya Suharmoko, The Jakarta Post, Jakarta | Sat, 01/03/2009 10:33 AM  

After closing the 2008 account, the government still has in its coffers Rp 51.3 trillion (US$4.6 billion) of unspent funds due in part to higher-than-expected earnings and lower-than-estimated expenditure, the Finance Ministry says. 

The unspent funds will be partly used to ease the impact of the global economic downturn, in the form of stimulus for the real sector, and to help plug the 2009 budget deficit currently forecast at Rp 52.73 trillion or 1 percent of the gross domestic product (GDP). 

Projects financed by the unspent funds will be carried out this year, including programs for developing communities in rural areas (PNPM) and the operation of the General Election Commission (KPU) which will organize this year's election. 

Finance Minister Sri Mulyani Indrawati said Wednesday the unspent funds would count as an addition to the stimulus package already included in the state budget for helping industries hit hard by the economic downturn. 

The government may disburse Rp 20 trillion of the unspent funds to add to the Rp 12.5 trillion allocated in the state budget for waived income tax, value added tax and import duties, she said. 

The unspent funds accounted for 5.2 percent of the 2008 state budget which totaled Rp 985.3 trillion. 

In October last year, the government had Rp 120 trillion of idle funds in the central bank. 

While state revenue reached Rp 981 trillion, 9.6 percent higher than targeted, state expenditure remained lower than expected at Rp 985.3 trillion, 0.4 percent or Rp 4.2 trillion below expectations. 

Local governments and infrastructure projects sponsored by several ministries accounted to the unspent fund due to bureaucracy snags and intention by some officials to profit from the interest proceeds from the fund, which was stored in banks. 

Analysts has said a sluggish government spending may slow economic activities, which had been spurred by domestic consumption propelled in part by public fund. 

According to the Finance Ministry, Indonesia managed to post a 6.2 percent growth last year, slightly lower than 6.3 percent recorded in the previous year, despite a slowdown in the third and fourth quarters. 

The figure was based on the realization of the revised 2008 budget, said Harry Z. Soeratin, the ministry's spokesman. 

The Central Statistics Agency (BPS) will announce the official figure in February. 

Meanwhile, 2008 inflation is estimated to reach 11.4 percent, higher than 6.5 percent expected in the state budget assumption. 

"Inflation was managed at about 11.4 percent by controlling the flow and supply of goods and services, as well as by cutting (subsidized) fuel prices two times in December," Harry said. 

The BPS will make an official announcement on December's inflation on Monday. 

Meanwhile, the 2008 budget deficit stood at 0.1 percent of the gross domestic product (GDP), or Rp 4.2 trillion, far lower than the Rp 94.5 trillion earmarked at the start of the year.