JAKARTA (TheInsiderStories) – Indonesia plans to revise the macro assumption in the State Budget of 2018 to better reflect the recent development, Finance Minister Sri Mulyani Indrawati said on Monday (09/04).
“Some macro assumption in the 2018 state-budget needs revisions. There are some changes in oil price, exchange rate, and oil production. There is also some further changes in the projection for state revenue, subsidy spending we should allocate in order to maintain the people’s purchasing power and to creating price stability,” she told reporters after attending a cabinet meeting on Monday (09/04).
Indrawati indicated government plans to revise the average oil price assumption to around $58-$65 per barrel from currently US$48.
The current state budget assumption sets Indonesia’s growth at 5.4 percent for this year, full year inflation at 3.5 percent, average rupiah exchange rate at Rp13,400 per U.S dollar. It also estimates the average the 3-month treasury bills rate at 5.2 percent, Indonesia Crude Price at $48.0 per barrel, and oil lifting at 800,000 barrels per day and gas lifting at 1,200 thousand barrels of oil equivalent per day.
Given the high volatility of oil prices and Indonesia’s position as a net oil importer with a daily import need of more than 800,000 barrels of oil (bbl), the period of low oil prices–below $50/bbl–which lasted until the end of 2017, has indeed been highly fortuitous for the President Joko Widodo’s administration.
Somehow, considering international oil prices are rising, raising gasoline price is the only way to meet the government’s energy subsidy spending target that is set in the 2018’s State Budget. The government emphasizes that the higher-than-estimated crude oil price will not destabilize the State Budget.
President Widodo has discussed with his ministers on the availability of State Budget and the indicative ceiling on the National Priorities Program in 2019. Currently, he said, the State Budget was only contributes approximately 15 percent of the GDP for the national strategic program.
“I have to say that after 3.5 years we focus on the infrastructure now we go into the second major phase is investment in human resources, which we set up this year and next year’s program,” Widodo told the ministers at the plenary meeting at the State Palace.
For that, he continued, government to uniting research institute at the ministry that currently has costs Rp24 trillion (US$1.75 billion) and more focus on strategic things. He expect the State Budget can push Indonesia’s economy more qualified.
Widodo also urged his ministers to coordinate and consolidate the key of government goals and remove the sectoral ego. Finance minister Indrawati said in accordance to drafting of the state budget for next year, government will evaluate State Budget in 2018.
For 2019, she continued, government will design a national budget deficit less than 2 percent of GDP. Indonesian GDP in 2019 its value will increase substantially is above Rp 16,000 trillion.
“The government will strive to design the budget 2019 of the one side is he still gives stimulus and support to the economy and social improvement. But the budget did not create a burden too great, causing an influence on perception and credibility of the state budget,” she stated.
Therefore, for 2019 total revenues will be targeted to increase between 7.6 percent to 13 percent from this year targets Rp1,894.7 trillion. From the expenditure side, for central government spending will rise about 7.3 percent and transfer of funds to the village rise about 8.3 percent.
“We will spend more than Rp823 trillion if not wrong to ministries and agencies earlier. Where programs referred to President for education, health, social vocation later to be our focus,” said Indrawati.
This year’s central government expenditure is budgeted to reach Rp 1,454.5 trillion, while transfers to the regions and village funds amount to Rp 766.2 trillion.
Allocation for infrastructure it will be performed at a relatively constant level. At the end, she explained the allocation for expenditure and capital will continue to increase. While the space of the fiscal will be used more widely to social spending and education.