Photo by Finance Ministry

JAKARTA (TheInsiderStories) – Indonesian government and House Representative agreed the economic growth for State Budget for 2018 in the range 5.2  to 5.6 percent, said Chairman of Commission XI Melchias Marcus Mekeng yesterday.

Finance Minister Sri Mulyani Indrawati said changing the macro assumption range from the proposed government indicates the House wants a balance and caution with what the government targets. According to her, the economic growth assumption still indicates the optimism of the government in building the Indonesian economy.

Sri Mulyani continued, the 2018’s economic growth target is also based on the recovery of global economic optimism that has been released by several institutions, one of which is the IMF.

“The IMF, World Bank said that the outlook for world economic growth will be more positive in 2017 and 2018. This is driven mainly by the US economy, but also for Europe there is relatively a recovery and certainly in this case for China will be relatively stable, Adjustment downward,” She said at the Working Meeting with Commission XI of parliament on Monday.

At the meeting, both parties also have agreed unemployment rate between 5.0 to 5.3 percent, poverty rate 9.5 to 10 percent, GINI ratio 0.38 percent to gross domestic product (GDP) and Human Development Index 71.5.

The minister also reported, the Indonesian government will make every effort to cut the primary deficit in 2018 to less than Rp100 trillion, or around -0.6 percent to -0.4 percent of the national gross domestic product (GDP).

The government noted that the primary deficit continued to fall from 1.23 percent in 2015 to 0.8 percent in 2017. Based on her projection, if the primary balance reaches zero percent, it means that the government will no longer issue debt securities to pay debt interest in 2021.

Sri Mulyani adding, the 2018 state budget bill could reach up to Rp 2,349 trillion. Meanwhile, the budget deficit is estimated at 1.9 to 2.3 percent of GDP.

In line with the budget deficit, the government estimates a primary balance deficit of 0.4 to 0.6 percent of GDP or in the value is around Rp 50 trillion to Rp 99 trillion. The budget deficit and the primary equilibrium deficit only slightly improved compared to the 2017 APBN target of 2.41 percent of GDP and Rp 109 trillion, respectively.

Minister of National Development Planning/Chairman of Bappenas Bambang Brodjonegoro sees two international events Asian Games and World Bank – IMF Meeting, regional election and preparation for the president election are considered capable of providing growth, particularly in the non-domestic consumption sector.

He estimates that non-household consumption in 2018 could be higher than this year. In terms of expenditure, Bambang believes the consumption sector will increase especially transportation, services and construction. (RF)

Basic Macroeconomic Assumptions in the 2018’s State Budget

– Economic Growth 5.2% to 5.6%
– Inflation 3.5 ± 1%,
– Exchange Rate (exchange rate) Rp 13,300-Rp 13,500 per US $,
– Interest rate of SPN 3 months 4,8% to 5,6%.
– ICP of US$45 to $60 per barrel.
– Lifting Petroleum 771 thousand to 815 thousand barrel per day
– Natural Gas Lifting 1,194-1,235 thousand barrels of oil equivalent per day

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