Indonesia Assesses the Policy of Financial Liquidity Loan Collaboration
Finance Minister Sri Mulyani Indrawati said Indonesian Economy Its Expected Grow 5.3 - 5.6 in 2020 - Photo: Ministry of Finance

JAKARTA (TheInsiderStories) — Indonesia Finance Minister Sri Mulyani Indrawati officially submitted state revenue and expenditure budget draft for 2020 to House of Representatives, on Monday (05/20). In the draft, macro assumptions set are not much changing compared to the challenging 2019.

In the macro assumption, the government set 2020’s economy to grow 5.3 percent to 5.6 percent. This is not so different compared to the government’s macro assumption stated in 2019 state revenue and expenditure budget draft, at 5.3 percent.

But the government’s successful steps on maintaining inflation made Indrawati set a lower inflation target. In 2020, inflation is projected to be maintained at 3 percent, with 1 percent deviation each for below and above. While in 2019, the government projected inflation at around 3.5 percent, plus/minus 1 percent.

Indrawati estimated the rate for 3 months letter of the state treasury at 5 percent to 5.6 percent. In the 2019 draft, it was set at 5.3 percent.

Rupiah against US dollar is set at Rp14,000-15,000 in 2020, amid the fear of global uncertainty. In the last few weeks, Rupiah has been showing fall off, exceeded the government’s estimation for the year. In the state budget of 2019, the government set the Rupiah assumption at Rp14,400.

Then, Indrawati didn’t set an optimistic target for the oil and gas. Indonesia Crude Price (ICP) is predicted in a range of US$60-US$70 per barrel. The target for both oil and gas lifting are set to be lowered. She mentioned that oil lifting is projected to be 695,000 to 840,000 barrels per day. Meanwhile, the gas lifting is estimated at 1.19 million to 1.3 million barrels of oil equivalent per day.

In 2019, ICP is predicted at US$70 per barrel. Furthermore, oil lifting is estimated at 750,000 barrels per day, with gas lifting at 1.25 million barrels of oil equivalent per day.

Indrawati considered that external factor is still the main consideration in establishing the macro assumptions. Especially, the trade war between the United States and China has been burdening the world’s economy, while the end of it is still unclear until now.

“We must increase awareness for the slowdown in external factors reflected in the weakening of national export growth,” she said.

Indrawati mentioned that the government will focus on maintaining investment and export recovery. Moreover, it will boost people’s consumption through strengthening purchasing power, price stability, and consumer confidence.

Previously, the ministry reported that the realization of state expenditure for the 2019 State Revenue and Expenditure Budget in the first quarter (1Q) reached Rp452.1 trillion, equivalent to 18.37 percent of the 2019 State Budget ceiling, which amounted to Rp2,461.11 trillion.

On an annual basis, state expenditure in 1Q 2019 grew 7.7 percent compared to the same period last year. The growth of state expenditure is supported by the absorption of central government spending by Rp260.7 trillion or growing 11.4 percent year on year (YoY).

The realization of central government expenditure consists of ministry and agency expenditures of Rp128.8 trillion and non-ministerial and institutional spending of Rp 132 trillion.

“Overall, central government expenditure has fulfilled 16 percent of the stipulated ceiling, which is worth Rp1,634.34 trillion for 2019,” it said on its latest report in April.

Meanwhile, expenditure for transfers to regions and village funds reached Rp191.3 trillion or grew 3.1 percent compared to the previous year. The realization of the funds reached 23.1 percent of the ceiling stipulated in the 2019 State Budget of Rp 826.77 trillion.

Realization of funds included transfers to the regions of Rp181.2 trillion or 23.9 percent of the target. The distribution of village funds amounted to Rp10.1 trillion or 14.4 percent of the target in the 2019 State Budget, it said.

The Director-General of Finance and Risk Management at the Ministry of Finance Luky Alfirman said that the absorption of the 2019 state budget expenditure was still in line with its line to meet the ceiling.

The growth of state expenditure which reached 7.7 percent, he said, was also better than the same period last year which only grew 4.9 percent, which was assessed by the Ministry of Finance in line with the improvement in spending patterns. “We are still within our targets while maintaining a deficit of 1.84 percent of GDP,” he said.

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