JAKARTA (TheInsiderStories) - Indonesia government sets deficit for 2017 draft State Budget in the range 1.9 - 2.5 percent. The projected 2017 deficit assumes a weaker exchange rate for the rupiah and a stronger economic growth rate.
Finance Minister Bambang Brodjonegoro said at a hearing with the Budget Committee of House of Representative (DPR) that Indonesia’s economic growth is predicted to reach around 5.5 to 5.9 percent in 2017, boosted by public spending at the range 5.1 - 5.2 percent, government spending growth of 6.2 to 6.5 percent and investment growth of around 6.4 to 6.7 percent.
Governor of Bank Indonesia (BI) Agus Martowardojo sees the Indonesian economic growth lower than the government expectation in the range 5.2 to 5.6 percent based on the improving of the domestic economy this year through a policy reform both on fiscal and monetary side.
As for the inflation rate, the government and BI have a similar assumption at the level 3 to 5 percent, while as for the rupiah exchange rate, the government sets it in the range of Rp13,650-13,900 per US dollar on average, while BI sets the Rupiah level at between Rp13,600 to Rp 13,900/US$.
Agus explained, until June 3, the average rate of Rupiah stood at Rp 13,592 against US dollar or appreciated 1.42 percent since January (ytd). In the future, he added, the Rupiah movement is expected to be still influenced by the Federal Reserves policy and China’s economic situation.
Bambang also sees other risks the government needs to take notice, in particular the slowdown of Chinese economy, low commodity prices and changing of the Fed rates, which is expected to be raised this month.
In domestic front, there are positive signs, including speed up of government expenditures and infrastructure development programs. The fundamental of Indonesia’s economy is relatively strong as seen by controlled inflation.
The government is currently drafting the 2017 State Budget submitted to the People’s Representative Council (DPR), commonly in August for approval.
Following is the highlights of the 2017 State Budget:
- Fiscal Deficit 1.9 – 2.5%
- GDP: 5.5 – 5.9%
- Inflation: 4.0 plus minus 1%
- Exchange Rate: Rp 13,650 – 13,900
- Interest Rate of SPN 1 month: 5.0 – 6.0%
- Oil Price: $35-45 a barrel
- Oil Lifting: 740 – 750 MBOPD
- Gas Lifting: 1,050 – 1,150 MMBTU
- Ratio hutang 26-27% dari GDP
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