Finance Minister Sri Mulyani Indrawati - Photo by Finance Ministry

JAKARTA (TheInsiderStories) – Minister of Finance (MoF) assured that Indonesia’s revenues will exceed the target in 2018 State Budget. First time in the history.

By the end of 2018, said the minister Sri Mulyani Indrawati, Indonesia can gain Rp1,936 trillion (US$133.52 billion) in state revenues, or 18.2 percent increase compared to last year. This year the government set target Rp1,894 trillion.

The outlook pictures, tax revenue grew by 15.2 percent, customs and excise rose by 14.7 percent, and non-tax revenue surged by 28.4 percent. Other than that, state expenditure is estimated to hike by 11 percent to Rp2,210 trillion, or rose 6.9 percent than last year.

Overall, government projected that 2018’s state budget deficit will be at 1.86 percent of gross domestic product (GDP). The figure is lower than the target, above 2 percent of GDP. The deficit still high caused the energy subsidized had exceeded the ceiling target.

Until third quarter (3Q) of 2018, the realization of the energy subsidy has reached Rp54.3 trillion or 115.9 percent of the targets at Rp46.9 trillion. According to the Ministry of Finance’s Director General for Budget Askolani, the subsidies has grown by 96.7 percent compared to the same period last year.

One of the reasons for the increase in the realization was because the government had to pay off the previous year’s unpaid subsidy Rp12 trillion. This payment is also based on the results of the audit of the financial audit agency.

He believed, the energy subsidy budget will certainly continue to increase because the government must adjust subsidies in accordance with the price of the increase in fuel borne by the government from Rp500 per liter to Rp2,000 per liter.

Meanwhile, the realization of electricity subsidies has also rose sharpen to Rp38.2 trillion or 80.2 percent of this year ceiling Rp47.7 trillion or experiencing a growth of 25.2 percent. As a whole the energy subsidies reaching Rp92.5 trillion or 97.9 percent of the targets of Rp94.5 trillion or experiencing a growth of 59.1 percent.

But in the meantime, the realization of non-energy subsidies recorded Rp30.9 trillion or 50 percent of the ceiling of Rp61.7 trillion. The increase in energy subsidies is predicted to continue to erode the state budget it shown by the consumption of diesel fuel which has only reached 82 percent as of Oct. 15.

The Regulatory Agency for Downstream Oil and Gas Activities noted that the solar subsidized quota has only reached 12 million kiloliters, where the total quota determined by the government 14.6 million kiloliters.

The minister reported that the 2018’s State Budget deficit until 3Q was Rp200.2 trillion, or equivalent to 1.35 percent of GDP. The deficit was lower than the same period last year worth of Rp272 trillion.

She added, the government also could reduce the primary balance number to a deficit of Rp2.4 trillion in September 2018. That figure is lower than last year’s primary balance deficit position of Rp99.2 trillion.

Friction between the two superpowers on trade war is considered not going to continue next year. For that the Indonesian economy can be at the level of 5.3 percent, said Coordinating Minister for Economic Affairs Darmin Nasution.

He mentioned that it is not a difficult task to fulfill the economic growth on target, in accordance with the macroeconomic assumptions of the 2019 state budget. Government is also optimistic that 2019’s inflation rate will still be in a safe level at 3 percent.

Thus, he stated, world economic slowdown will not dampen Indonesia government’s move to implement supply side economic policies, as it has positive impact on the economy and other social indicators.

US$1: Rp14,500

Email: linda.silaen@theinsiderstories.com

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The Insider Stories Founder Linda Silaen has a solid, proven history, established over more than a decade as a journalist with a leading internasional news organization, of being the first with the biggest economic news stories in Indonesia. Specializing in corporate news, Linda is also a veteran of some of the biggest macroeconomic and general news stories as Indonesia rapidly transforms into a major market economy. One of the founders of the original blog from which this company developed, Linda’s knowledge of investors’ information communications and data us developed from unrivaled networking skills that make her a well-known name among CEOs, bankers, government officials and private equity investors both in Indonesia and other countries.

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