Dear Prudence

THE government's failure to control the sharp rise in energy prices has finally led to major problems. Five months before he steps down, President Susilo Bambang Yudhoyono has ordered massive budget cuts on 86 projects managed by ministries and state institutions. The difference this year in the annual tradition of simultaneous budget cuts is that there are details for every institution, and that the targeted savings total Rp100 trillion.

The government has been forced to take this step because the budget deficit is too large. Initially it was thought that it would be safe, at around Rp175.4 trillion, or 1.69 percent of GDP. However, the deficit has now swollen to Rp472 trillion, making it 4.60 percent of GDP. This is the case, despite a law limiting it to a maximum of 3 percent.

June 17, 2014