STATE ADDRESS

OF
THE PRESIDENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT STATEMENT
ON
THE DRAFT STATE BUDGET
OF THE FISCAL YEAR 2003
AND ITS FINANCIAL NOTE

BEFORE
THE HOUSE OF REPRESENTATIVES
ON 16TH AUGUST 2002

Honourable Speaker, Vice Speakers, and Members of the House of the

People’s Representatives,
Honourable Chairmen and Members of the Highest and High State Institutions,
Your Excellencies Ambassadors and Representatives of International Agencies
and Organizations,
Distinguished Guests, Ladies and Gentlemen,

Assalamu ‘alaikum Warrahmatullahi Wabarakatuh.

May peace and prosperity befall upon all of us.
 Tomorrow morning we will commemorate the 57th anniversary of our
independence. Before we relish this remarkable luxury, it is only proper that we
praise and thank God the Almighty, for it was due to His blessings that we could
gain our independence. We are well aware that the independence was won as
a result of an arduous and lengthy struggle, as well as an immense sacrifice,
including the loss of lives of the best people of our nation, not to mention the
treasures and possessions that were dear to them.

As a result, in moments such as this, it is fitting that we pay tribute to

those who have bequeathed us an independent nation: the Unitary State of the
Republic of Indonesia. This is also the right opportunity to ponder on the
purposes of the independence that have served as the foundation and the
essence of the struggle and sacrifice, which have, clearly and concisely, been
reflected on the Preamble of the 1945 Constitution, that is to form a government
of the Indonesian Nation that protects the entire people and motherland of
Indonesia, to promote people’s welfare, to improve the minds of the people, and
to participate in the creation of a world order based on freedom, lasting peace
and social justice.

We have now been independent for a period of 57 years. We have

gone through countless events and experiences, those that were significant or
lesser, pleasant or frightful, as well as distressing or pleasing. They were, in
fact, most valuable lessons.

Our wisdom today is like being put to test by our ability to learn the
lessons from the past and from the experiences. Before us lies the reality that
we have yet to realize the ideals of independence to build a just and prosperous
society. Only with great efforts were we able to overcome the impacts of the
monetary crisis four years ago. Other subsequent problems, including the threat
of national disintegration, have only been recently subsided, exhausting the
already limited energy and resources.

Two weeks ago, I gave the account in a report on the implementations

of various Decrees of the People’s Consultative Assembly that serve as
guidance for the President in the execution of the state administration. The
implementations of the Decrees are still in progress, and, God willing, its results
will be reported to the next Assembly’s Annual Session. In this connection, I
earnestly observe all Decrees of the People’s Consultative Assembly resulted
from the Assembly’s Annual Session convened last week, and will use them as
guidance in the endeavour to find a resolution to the complex and complicated
problems.

In commemorating the 57th anniversary of the Republic of Indonesia,

allow me to relate a brief summary of the historical perspectives of the whole
substance of the Assembly’s Decrees, specifically those relating to the four
amendments of the 1945 Constitution. I am of the opinion that amendments are
essential, particularly in these circumstances whereby some of us may be
losing our perspectives and orientations. In this connection, there are two points
that need to be underlined and merit our careful consideration.

First, whether we realize it or not, the crystallization of the national spirit

as embraced in the Preamble of the 1945 Constitution is apparently deeply-
rooted in our hearts and minds as a nation. The four paragraphs of the
Preamble of the 1945 Constitution, launched on 18 August 1945, could clearly
incorporate the ambitions and aspirations of the entire diverse people of
Indonesia, that is with regard to the five principles of the state foundation, the
national direction, and the government’s duty. Therefore, the perspectives of
nationhood and statehood they embodied have not only been constitutionally
legitimate, but have also been ideologically and historically legitimate. It is our
responsibility to not only sustain the concurrence of our forefathers as a binding
political contract, but also to inform and pass it onto the generations that will
assume the responsibilities of the nation in the future. After all, this nationhood
and statehood is a long-term struggle that would involve generations after
generations, whereby each generation will have its historical roles and
responsibilities. A break in the historical continuity due to negligence of a
generation should be prevented from happening.

Second, a series of amendments of the Constitution endorsed by the

People’s Consultative Assembly, and the law and regulations legislated since
the first year of the reform era, have changed our national life and the system
and structure of our government, all of which still need following-up by all
parties concerned. We should be aware that we are at the moment taking a
great step that will have great bearings on the coming decades.

This new national system needs a follow-up that must be implemented

in a sustainable manner in the months and years to come. The follow-up should
cover not only areas of the central and provincial government, but also areas of
the legislative and the judicative, as well as the political parties, non-
governmental organizations, and even individual citizens.

In the government area, in line with our determination to lessen the

centralized characteristics in its conduct, or in order to further develop the
capacity of the provincial government through regional autonomy, the role and
responsibility of the conduct and authority of the government have also been
further relinquished to the provincial government. It must be observed that with
the regional autonomy, much of the responsibility should now be managed for
the better by the provincial governments, particularly that related to basic
services, public order and secure living of the community in their respective
regions. Regional autonomy must indeed be comprehended more by the
provincial governments, by the provincial legislative councils, by the political
parties as well a by the communities in the regions. Regional autonomy should
not be understood merely of its rights and authority, but also of its duty and
responsibility.

There will be many more problems that may arise and need to be
addressed before the new national structure can perform. Quite different from
the pre-reform structure, at present the focus of the state administration lies in
the legislative body. We imagine how heavy the duty of the legislative body will
be. Its performance will be much determined by the quality of the
statesmanship of the legislators as well as by the political parties that they
represent. All these require our ability to review the statesmanship role of the
political parties that have now numbered to more than 200.

The practical problem that will arise in such a situation is that a political
party cannot easily develop to become a powerful party that can effectively
support the performance of the government, something that has really become
a need in the presidential system of government that we have adopted.
Another problem that may arise from such a situation is that, consciously or
unconsciously, theoretically it will encourage the implementation of a
presidential government but in practice it will behave as a parliamentary one.

Based upon this development, the introduction of the new regulation

concerning the election of a president directly by the people is expected to
overcome the weakness of the multiparty system while at the same time will
enhance the legitimacy and accountability of the president elect, as well as to
maintain the unity and integrity of the nation. In the future, a presidential
candidate must not only obtain the formal support of the people but must also
understand the aspirations and the needs of this diverse nation.
 The national phenomenon that also needs our attention is the arrival of
various non-governmental organizations (NGO’s) that have exerted their
presence in many areas of our national and state life. In general, it can be said
that the nationhood and statehood role of these NGO’s is indeed constructive.
Some involve themselves directly in the community to empower our people,
especially in the areas that cannot be reached or have not yet been reached by
the structure of the social communal leadership or by the state apparatus.
Some others focus themselves in criticizing the state institutions, such as the
legislative, the executive and the judicative bodies. However, it cannot be
denied that some of the NGOs are irresponsible or less credible in
implementing their actions and role. After all, there is a need for restructuring so
that the NGO’s will be able to place its proper position and play effective role
within the new structure that we have always desired.

Ladies and Gentlemen,

Following the trail of our nationhood and statehood, as well as the
ideals that we want to achieve, it turns out that the challenges and problems
which surrounds them as well as the efforts to address the issues lie in one
single feature.

The quality of the people and the nation will finally depend much on the
quality of the citizens and the quality of the community groups who live under
their respective leaderships. Seen from this basic point of view, through this
forum I appeal to every leadership of the community groups at all levels to
restructure themselves in a well-planned manner as part of our national system.

If we can make it work, we will at least be able avoid the destructive

frictions that may take place among the elements in the communities, while on
the contrary it will create a synergy effect of all our national potentials.
 The quality of the citizens and the community groups will, at the same
time, reflect a strong legal culture. Attitude, behaviour and level of obedience
towards the norms or the existing regulations will determine our efforts to bring
into reality the maintenance of order and the supremacy of law.

The mapping of the problem of the supremacy of law cannot be

separated nowadays from the absence of this condition. At the institutional
level, as I have conveyed before the Annual Session of the People’s
Consultative Assembly on 1 August 2002, the effectiveness of the law
supremacy is very much affected by the condition of the institutions that lie
under the government, under the judicative body and under the professional
activities of lawyers, who respectively follow the presiding law.

Honourable House,
That is the long trail and the flashback of the ups and downs of our
national life and our country. It should be without argument that we must unite
and work very hard in order to immediately exit from the many present
difficulties. Step by step, we have settled the problems according to the
planning or the program that we have agreed upon, and based on the priorities
that we have set up.

Now, accepting the requirement of the Honourable House, I am also

taking this opportunity to convey the Bill on the State Budget of 2003 to the
House.

The draft State Budget that I am presenting today is of the utmost

importance, particularly in view of the efforts in achieving targets set forth in
various decrees of the Peoples’ Consultative Assembly (MPR), which have yet
to be completely realized, as well as in implementing other decisions of the
recently convened Annual Session of the MPR. The process in preparing the
State Budget for Fiscal Year 2003 was based on evaluation of the
implementation of the ongoing State Budget of Fiscal Year 2002, as well as the
developments in our surroundings, which strategically affect the life of our
nation.

We are grateful that the strategic situation surrounding us is showing

signs of improvement. The world is far peaceful than before. We observe signs
of declining global and regional conflicts, even though potential disturbances
still lurk ahead, especially if neighbouring nations and communities of nations
are not careful and wise in handling potential problems.

Although still afflicted by uncertainties, the global overall economic

condition is better than that of 2001. Last year the world’s economy grew by 2.5
percent, during 2002 it is estimated at approximately 2.8 percent. If positive
factors could be maintained, in the year 2003 the global economy is estimated
to continuously improve.

Domestically, we have moved several steps towards the improvement

from the crisis condition of 1997/1998. Improvement in the political and security
conditions and the progress of macroeconomic performance are expected to
give a positive impact on the gradual economic growth in 2002. During the first
quarter of 2002, the economy has only grown at 2.2 percent due to, among
others, the floods and natural disasters in several areas. However, early
indicators in various sectors indicated a 3.5 percent rate of growth in the second
quarter. If we are able to maintain this momentum, there is a great possibility
that economic growth can protract to 5 percent in line with improvements in the
economic and non-economic conditions, from within and outside.

The overall balance of payment in 2002 is estimated to be quite stable,

with a surplus in the current account of US$ 4.7 billion and reserves amounting
to US$ 28.9 billion or equivalent to 5.8 months of foreign exchange for import
and payment of the government’s foreign debt. In the year 2003, Indonesia’s
balance of payment is estimated to suffice with an increase of reserves in the
amount of US$ 29.3 billion.

Domestic consumption, an important element in the economic growth

to date, is estimated to continuously strengthen. Aside from indications of
strengthening income of the people, consumer-driven growth is affected by
stable domestic prices and more strengthened value of the Rupiah against
foreign currency, which in turn also increases the people’s purchasing power.

We also hope to continue depend on other sources of growth, namely

investment and export. The performance of investment and export in 2003 will
depend mainly on our efforts in restoring the confidence of the economic actors,
aside from our achievement in creating social and political stability, maintaining
security, accelerating the banking, corporate and private debts restructuring
process, as well as law enforcement. The reactivation of the various large
projects that were once delayed due to the economic crisis, is also expected to
drive the development of the real sector.

Lately, indicators of macro economy have shown some improvements.

The accumulation of inflation rate that has reached 5.3 percent during the
period of January – July 2002, is expected to remain under control. Similarly,
the exchange rate of rupiah is expected to remain stable in 2003. Meanwhile,
the interest rate of government bonds for three-month period has shown the
trend to decrease from 17.6 percent in December 2001 down to 15 percent in
July 2002.

Based on our evaluation about the development and performance of

national and global economy as well as the prediction for the year 2003, the
Government draws the Draft Budget of 2003 on the macro economy
assumption, namely 5 percent economic growth, 8 percent inflation rate,
average exchange rate of Rp8,700 against US$1, average 13 percent interest
rate of government bonds for three month period, and US$ 20.5 for every barrel
of oil with average production of 1.2 million barrels per day.

Honorable Speaker,
Ladies and Gentlemen,
Against the background and assumptions I have described earlier, the
Draft State Budget of 2003 has been formulated. The main objective we are
going to achieve is to increasingly maintain the fiscal sustainability as the
foundation for economic and monetary stability as well as for restoring
confidence, which in turn will encourage real sector activities and provide more
job opportunities.

The Draft Budget of 2003 is expected to encounter deficit around Rp26.3

trillion or about 1.3 percent of the GDP. Such an expected deficit is lower in
comparison to that of last year’s Budget, which reached 2.5 percent of the GDP.
As we are determined to continuously lower the level of deficit, it is hopeful that
we would be able to have a balanced budget in the year of 2004 or 2005.

As to the issue of debt, both foreign and domestic, we would continue to

handle it with care so that it is still within the capacity of state budget to
shoulder. Should the target of growth be achieved and the monetary stability
and the strengthened rupiah be maintained, the Government will gradually
lower the debt ratio against the GDP. The Government is preparing steps to
modify the profile of outstanding domestic debt so that its burden would be
better managed in the State Budgets of the years to come. The Draft Budget of
2003 is also defined to lessen domestic debt by setting aside some of the
IBRA’s sold assets and the results of privatization program, as has been
planned during the current fiscal year. In addition, the debt payment is also
designed to come from the fund of Surplus Budget.

In the Draft Budget of 2003, national revenues and grants are estimated
to reach Rp327.8 trillion which is 8,6 percent higher than the target set in the
State Budget of 2002. Revenues from tax sector will become the most reliable
income targeting Rp260.8 trillion with 18.7 percent increase as compared to last
year’s set Budget. In view of its crucial role in the state budget, the
Government, in addition to its effort to continuously enhance the awareness of
the tax payers, will continue improve the tax and customs management. I wish
to appeal to all tax payers to support this program by seriously meeting their
obligations as the tax is very instrumental in realizing equal distribution and
justice. For those who have met their obligation, allow me to express my
appreciation.

Beside tax income, the Draft Budget of 2003 also includes non-tax
income, which is expected to reach Rp67 trillion, or 18% lower than the target
set in the last year’s State Budget. This is due to the expected decrease in the
revenue, particularly that from the handling of gas and oil as well as from the
action of our own intention to allow our forest to breathe again.

Out of the total national revenues, some Rp186.4 trillion will be devoted
to routine expenditure. The figure is in fact 3.8 percent lower than the one
allocated in the current State Budget. Such a decrease is primarily because of
the decrease in the burden of debt interest and subsidy provision.

The payment for debt interest is estimated to reach Rp80.9 trillion, or

around 8.6 percent lower than the planned payment for debt interest in the
current Budget. Such a decrease is especially due to the reduction in the
burden of domestic debt interest from around Rp59.5 trillion in the current
Budget to Rp55.1 trillion, as a result of the decrease in domestic interest rate
and the decision to repurchase government bonds. Furthermore, the decrease
in the burden of debt interest is also associated with more lowered burden of
foreign debt from Rp29 trillion in the current Budget to Rp25.8 trillion. In addition
to the predicted decrease in the international interest rate, such a decrease in
the burden of debt interest is owing to stronger rupiah as well as to the Paris
Club agreement on the rescheduling of debt, both its capital and interest.

Meanwhile, expenditure for subsidy in 2003 is estimated at around

Rp25.3 trillion, or 39 percent lower than that allocated in the State Budget of
2002. Such a decrease is possible due to the reduction in oil subsidy to Rp13.6
trillion compared to the subsidy in the 2002 Budget amounting to Rp30.4 trillion.
On the other hand, the burden of non-oil subsidy is even estimated to increase
from Rp11.2 trillion in the current Budget to Rp11.8 trillion in 2003 due to,
among others, the subsidy given to fertilizer for the farmers.

In accordance with the Law No. 25 of 2000 on the Five-Year National

Development Program (PROPENAS), oil subsidy will be abolished by the year
of 2004. In fact, gasoline is now 100 percent at the market price. It is planned
that in 2003, all kinds of domestic oil and gasoline will be 100 percent at the
market price, except kerosene for the households that still enjoys subsidy.
Similarly, in 2003, we will continue to reduce subsidy for electricity by gradually
modifying its basic rate by average 6 percent quarterly. We will set the provision
of subsidy for electricity as a matter of priority to social, households, business
and industrial customers who consume electric energy below 900 watt.

In order to help reduce the burden of particular groups of society who are
affected by the decrease in oil and electricity subsidies, a social compensation
fund will be allocated next year in the development budget.
 Besides for oil and electricity, it is also planned to provide subsidy for
food in 2003 to ensure its distribution and availability at the price within the
reach of the poor people. This step will be carried out through the program of
“rice for the poor” that provides cheap rice. The program will be supported by
allocated fund amounting to Rp4.8 trillion which is expected to cover 9.2 million
poor families.

In addition to the spending for payment of debt interest and subsidies,

the routine expenditure is also allocated for the salary of the civil servants
amounting to Rp51.9 trillion, an increase of 25.7 percent compared to their
allocation in the current Budget. As I promised during the annual session of the
People’s Consultative Assembly on 1st of August, the Government will extend
its additional appreciation to all teachers. The increase in the spending for
salaries is, among others, aimed at improving educational allowances for
teachers up to 50 percent. Such an increase is also intended to raise the
salaries of the civil servants including teachers, members of Indonesian military
and police, as well as retired ones up to 10 percent, and to set some
adjustments for several functional allowances that are yet to rise for some time.
Such a particular spending will also include the plan to recruit around 58.000
central government civil servants comprising teachers, medical and
paramedical personnel, and the military as well as the police. In addition, it will
also cover the increase in extra-fooding expenses for the military and police
personnel from Rp12.500 to Rp15.000,- per person daily. Aside from the
allowances for teachers, whose raise I propose to be effective on 1st of October
2002, the raise of other salaries and allowances may commence by the 1st of
January 2003.

The increase in the routine expenditure is also allocated to finance some

other activities such as the conduct of general election in 2004, the steps taken
to cope with natural disaster, and the public reserve fund to anticipate the need
for additional expenditure due to the inability to meet basic assumptions when
formulating the State Budget.

Honourable House,
Permit me now to submit the main points of development expenditure for
2003. As in the current Budget, the development expenditure for 2003 still has
very limited fund. Yet, development expenditure coming from domestic
resources, namely rupiah financing, will reach Rp36.2 trillion, or 36.9 percent
increase as compared to the threshold set in the Budget of 2002. Meanwhile,
the financing of foreign loaned projects will undergo a decrease of around 29.3
percent as compared to last year’s threshold at Rp.18.3 trillion.

From the management perspective of development expenditure, the

development spending is managed by both central and regional governments.
The development expenditure managed by the central government is directed
to finance the implementation of its task and to finance the equal distribution of
development among regions through de-concentration and assistance.

Allocated fund managed by the central government for equal distribution

is aimed at bridging development gap in some regions, especially whose fiscal
potentials are lower so that the harmonious level of welfare can gradually be
achieved among the regions within the Unitary State of the Republic of
Indonesia. The acceleration of development in the eastern part of Indonesia
conducted through sectoral and regional approaches is a manifestation of the
Government’s effort to address development gap among regions.

In the main time, the management of development spending by the

regional governments should be carried out in effective and efficient manner for
the improvement of public welfare in their respective regions.
 On this occasion, I take liberty not to discus the allocation of
development expenditure for each and every sector of development. The
detailed and complete allocation has been submitted to the Honorable
Members of the House. Nevertheless, I would like to present the plan of
development spending in some sectors particularly those having direct impact
to public welfare or having closely connected to efforts of meeting the public
basic needs such as education, health, food, settlement, defense and security,
and transportation

In the draft development budget of 2003, there are 5 sectors that are
directly related to the fulfillment of the basic needs of the people and are
allotted rather significant amount of the development budget. The sector of
education, national culture, youth and sports is allotted Rp13.6 trillion, or around
25 percent of the total development expenditure. The sector of agriculture,
forestry, marine and fishery as well as irrigation is allotted Rp8 trillion, or 14.3
percent of the total development expenditure. The sectors of transportation,
meteorology and geophysics are allotted Rp6.8 trillion, or 12.5 percent of the
total development expenditure. The defense and security sector is allotted
Rp5.7 trillion, or 10.4 percent of the total development expenditure. The sectors
of social welfare, health, and the empowerment of women is allotted Rp5.4
trillion, or 9.9 percent of the total development expenditure. As a whole, the five
sectors received around 72.1 percent of the total development budget.

The development budget for the education sector is given a special

priority in order to accelerate the accomplishment of the 9-year mandatory
learning program of elementary education. In our efforts to accomplish this
compulsory learning, the main activities to take place are the rehabilitation, the
revitalization, the regrouping of the elementary schools and Madrasah
Ibtidaiyah, the development of new school units and new classrooms for junior
high schools and Madrasah Tsanawiyah, the development of special education
units such as open elementary and junior high schools, the implementation of
outside the school education and scholarship awards for pupils coming from the
economically unfortunate families. Aside from that, there will also be efforts to
improve the quality and the relevance of education on all lanes, types and
levels of education. The development budget for education sector will also be
used to strengthen the decentralization of education and its management on the
basis of the school and the community.

Furthermore, as the recipient of the second biggest development

budget, the sector of agriculture, maritime and fishery as well as irrigation is
given priority to develop the agriculture in order to improve the food resilience
and the development of agribusiness.

In order to support the agriculture sector, in particular the food

resilience, the irrigation sector is allotted Rp4.1 trillion. The money will be used
for maintaining the level of service of infrastructure and facilities for irrigation
that have been constructed through the activities of maintenance and
rehabilitation of irrigation network. Aside from that, the money is also used to
develop new irrigation networks on the areas of rain-dependant rice fields,
reservoirs and flood control facilities as well as other water management
activities. In line with the policy of decentralization, the Provincial Government
will shoulder a bigger task and responsibility in the maintenance of irrigation
facilities.

In the mean time, the sector of transportation, meteorology and

geophysics that receive the third biggest allotment is given priority to maintain
the level of service in order to meet the technical standard of good
transportation service which is related to the safety, the good flow as well as the
accessibility of transportation service for the community, particularly through the
provision of subsidy for the pioneer transportation in remote areas.
 As the recipient of the fourth biggest development budget, the program
in the areas of defense and security is directed towards the enhancement of the
capacity of the military to maintain the sovereignty and integrity of the unitary
state of the republic of Indonesia, as well as to improve the number and quality
of the police force in order to materialize the security and public order, and to
promote law enforcement. The development budget for the military will be used
to maintain the existing materials and to provide new materials in order to bring
to reality the operational readiness of the force.

Meanwhile, the Indonesian Police development budget is used to

maintain the gradual improvement of the Police force in order to meet the
adequate personnel, material, and facilities needs.

Together with the sector of social welfare and women empowerment,

the development of the health sector, which is given the fifth largest allocation,
is specifically targeted towards the improvement of quality and scope of basic
health and referral services, particularly for the poor. Aside from that, the health
sector budget is also used to tackle disorders resulting from iodine and vitamin
A deficiencies, to improve safety measures relating to drugs and dangerous
substance abuse, to tackle HIV/AIDS and other infectious diseases, to improve
food safety and supervisory measures, and other programs essential to the
improvement of people’s welfare.

Apart from the above five sectors, there are development expenditures
directly related to people’s welfare, namely the housing and settlement sector
that amounts to Rp1.5 trillion, or 2.7 percent of the total development
expenditures, the settlement and handling of refugees problems amounting to
Rp1.9 trillion, and the program in dealing with the impacts of energy subsidy
reduction amounting to Rp3.1 trillion, or 5.7 percent of the total development
expenditures. For the latest in particular, the spending is targeted towards the
needy who are directly affected by the energy subsidy reduction policy. The
budget comprises of social compensation fund for education, health, food,
transportation, clean water, empowerment of communities in coastal and
remote areas, and micro credit.

Budget for housing and settlement sector development is targeted

towards completing and improving basic facilities and infrastructure services for
housing and settlement in urban and rural areas, such as the supply of clean
water, drainage infrastructure and sanitation. In addition, construction and
ownership of modest and simple houses, as well as modest flats will be
facilitated. These activities will be complemented by the improvement of
financing for development and housing ownership scheme, and mechanism of
subsidy for lowly paid communities.

Close to the above infrastructure and facilities are natural resources,

environment, and spatial planning sectors. They are paid due attention in order
to improve the implementation of sustainable development principles.
Specifically for environment, a fund is allotted to finance the enhancement of
community empowerment and environment management in the context of
regional autonomy, and to finance law enforcement in this area.

Other sector also given due attention is labour. Programs in this sector
in 2003 are directed, among others, towards the improvement of labour quality
and productivity, and the protection of labour in Indonesia and abroad.

Honourable Session of the House,

The development expenditures of the various sectors I have mentioned
are but a few of the development activities carried out by the Government.
Other development activities will be carried out by and are the responsibilities of
Regional Governments.
 The regions, therefore, will be provided with balancing allowances
comprising Shared Fund, General Allocation Fund, Special Allocation Fund,
and Special Autonomy and Balancing Fund in the sum of Rp113.2 trillion. The
amount is 15.6 percent higher than the balancing allowances allotted for the
Fiscal Year 2002. I expect that the use of the balancing allowances be directed
at poverty eradication programs, fulfilment of communities’ basic requirements,
such as education, health, food, housing, and transportation, so as to be in
synergy with and complementary to the Government’s development priorities,
and by as much as possible observing the transparency and accountability
principles.

Last year, the Special Allocation Fund derived from the Reforestation
Fund was only used by the contributing region. In 2003, a Non-Reforestation-
Fund Special Allocation Fund will be provided, whose allocation is prioritised for
three areas, namely education, health, and infrastructure. The Special
Allocation Fund will be allocated, among others, to support regional programs
that are proven to improve public service, particularly in the areas of education,
health, housing, and regional infrastructure, so as to become more meaningful
to the public.

In total, the state’s expenditure including the balancing allowances

amounts to Rp354.1 trillion, whilst the state’s revenue amounts to Rp327 trillion.
Therefore, in 2003, the deficit will reach Rp26.3 trillion. The deficit is planned to
be paid for by domestic funding, which amounts to Rp16.9 trillion, drawn from,
among others, the privatisation of the State-Owned Enterprises and the selling
of assets managed by the Indonesian Bank Restructuring Agency (IBRA), in
addition to overseas funding which amounts to Rp9.4 trillion net.

Honourable House,
 That is all the Government’s point of view that forms the background for
the preparation of the 2003 Draft State Budget. The challenges ahead are
tough, and our options are limited. Nevertheless, the 2003 Draft State Budget
gradually demonstrates improvements from the situations we were in last year.
God willing, the improvements will last, so we can, optimistically and with the
spirit of gotong royong (mutual help), make good our commitments. I believe
that with joint convictions and efforts of the Government and the private sector,
including small and medium enterprises, and cooperatives, we can realize a
better future.

With the same spirit and optimism, the Government, together with the
House, are prepared to discuss the 2003 Draft State Budget. I hope the
deliberation will be completed on time, so as to provide ample time for regions
to prepare their regional budgets. Therefore, all development activities will be
carried out simultaneously early next year.

Finally, allow me to once again express my gratitude for the attention

and patience of the Honourable Speakers and Members of the House and all
the guests. Thank you.

Wassalamu ‘alaikum Warahmatullahi Wabarakatuh.

Jakarta, 16 August 2002

President of the Republic of Indonesia

MEGAWATI SOEKARNOPUTRI

Sumber: http://www.setneg.ri.go.id/pidato/pid_indonesia_17'02.htm
Koleksi: Perpustakaan Nasional RI, 2006