Jakarta – Indonesia on Monday outlined five key steps to keep its budget deficit at the forecast 3.7 percent of gross domestic product in 2001 amid fears of an uncontrollable blowout. "We will try to increase revenue and reduce expenditure to compensate for higher expenses as a result of the weaker rupiah and higher interest rate," Finance Minister Prijadi Praptosuhardjo said in a statement.

He said the government would focus on:

• expanding the tax base in certain areas to increase revenue;
• cutting subsidies for oil and electricity;
• using funds allocated for the regions under Jakarta's decentralisation policy efficiently and sparingly, concentrating on provinces in deficit;
• cutting back on low priority development projects;
• spending less on implementing the government's decision to hand more economic and political control to the regions.

Government finances have been hit hard by rising interest rates – currently at 21-month highs – lower revenue, higher costs and a plunging rupiah that has already lost 20 percent of its value this year.

The International Monetary Fund warned on Monday the deficit could blow out to six percent of GDP unless urgent corrective measures were taken.