Head of Fiscal Policy Office of MoF Suahasil Nazara - Photo Privacy

JAKARTA (TheInsiderStories) – Indonesian government and Budget Committee of Indonesian parliament set the budget deficit in the 2019 State Budget of 1.84 percent of the Gross Domestic Product (GDP). This figure has decreased compared to the projected deficit in the 2018 State Budget of 2.12 percent of the GDP.

Head of the Fiscal Policy Office of the Ministry of Finance, Suahasil Nazara told the parliament members on Thursday (20/09) that the decline in the projected deficit had occurred since the past three years. In 2015, the state budget deficit was 2.59 percent. The deficit then slowly decreases every year.

According to him, Indonesia’ fiscal policy is still expansive. The government spends a larger budget than the state receives and this makes the government still experience a state budget deficit. However, he said, the deficit in the State budget is still predicted continue to decline until finally it can touch the positive values.

Suahasil said, the decline would make the state budget stronger. With a lower deficit, the government can push the primary balance towards positive or close to zero.

Based on data from the Ministry of Finance, the country’s primary balance with the largest deficit occurred in 2015 with a magnitude of Rp142.5 trillion (US$9.83 billion). This value is continued until 2018, where it is estimated that the primary balance deficit around Rp64 trillion.

“Next year, we are targeting to stay at Rp27 trillion,” said Nazara by adding with the deficit value decreasing, the primary balance is expected above zero or have a surplus in 2020.

To finance the budget deficit, the committee and the government set the debt financing of Rp359.12 trillion in 2019, dropped form previous number of Rp359.27 trillion. The decline was due to changes in the Rupiah exchange rate against the US dollar.

Nazara explained, with this figure, the government wants to ensure that the risk of debt remains within manageable limits, which is under 30 percent of GDP. The government tries to utilize debt for productive activities and maintain macroeconomic balance.

He added, on a net basis, Government Securities issued had decreased from 2017, from Rp441.8 trillion to Rp388 trillion in net 2018. Next year it is expected to fall back to Rp386.2 trillion or experience a decline around 0.5 percent.

In details, the net domestic loans amounting to Rp482.4 trillion and net foreign loans amounting to Rp. 27.57 trillion.

For 2019 non-debt financing, the government set a target of Rp62.13 trillion. Non-debt financing is aimed at creative and innovative financing to accelerate infrastructure development while encouraging the financing of community empowerment financing.

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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