Indonesian government widens the deficit of 2020 State Budget to 2.5 percent, from initially 1.76 percent of gross domestic products (GDP) - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – Indonesian government widens the deficit of 2020 State Budget to 2.5 percent, from initially 1.76 percent of gross domestic products (GDP), said finance minister. The additional deficit its estimating worth of Rp120 trillion (US$8.27 billion).

“From the State Budget side, the deficit will increase 2.5 percent of GDP after we provide a new stimulus 0.8 percent of GDP,” Sri Mulyani Indrawati told reporters on Friday (03/13).

The government just announced has prepared second stimulus with total amount Rp147.90 trillion for the manufacturer and workers to help the domestic economy from COVID-19 effects. The nation prepared fiscal incentives Rp22.9 trillion. Beside, the government also prepared non-fiscal stimulus is related to the simplification of the export import permits.

In this year, the government set economic growth at 5.3 percent, inflation at 3.1 percent, the average exchange rate of Rp14,000 per US Dollar, the state treasury coupon rate of 5.4 percent, oil price US$63  barrel. oil lifting around 755 thousand barrels, and lifting of natural gas at 1.19 million barrels.

Then, the state revenues are set around Rp2,223 trillion and the government spending Rp2,540.4 trillion. With these assumptions, the government expect an unemployment rate at 4.8 – 5.0 percent, poverty rate 8.5 – 9.0 percent, GINI ratio of 0.375 to 0.380, and a human development index of 72.51.

In 2019, Indonesian recorded a budget deficit Rp353 trillion or 2.2 percent of the GDP. The realization has swelled compared to the 2019 state budget target of Rp296 trillion or 1.8 percent of GDP, and the realization of the 2018 state budget amounting to Rp269.4 trillion.

“The deficit came from state expenditure of Rp 2,310 trillion, while revenues only reached Rp1,957 trillion. So the realization is indeed greater than the initial target of Rp296 trillion, up from the target of 1.84 percent of GDP to 2.2 percent of GDP,” .

The deficit was driven by the realization of revenue growth that was lower than the realization of growth in state spending. This is due to the pressure on state revenue because of the weakening of the global economy, the minister adds.

The ministry noted state revenue until the end of 2019 reached Rp 1,957.2 trillion or grew 0.7 percent year on year (YoY). Realization of state revenue only met 90.4 percent of the revenue target in the state budget, which as a whole was Rp 2,165.11 trillion.

Indrawati detailed, the government revenues from taxation only reached Rp1,545.3 trillion or 86.5 percent of the target. While non-tax state revenue reached 107.1 percent of the target of Rp405 trillion and grant income of Rp 6.8 trillion from the target of Rp400 billion.

Meanwhile, state expenditure grew 4.4 percent YoY or reached Rp 2,310.2 trillion. Realized expenditure only met 93.9 percent of the ceiling of Rp 2,461.1 trillion. Then state expenditure growth in 2019 was slower than in 2018 which grew 10.3 percent annually.

In detail, state expenditure for the central government is Rp1,498 trillion or 91.7 percent of the target. State expenditure was driven by the increased distribution of transfers to the regions and village funds. As of December 2019, the ministry said that funds transfer to the regions and village funds had grown by 7.1 percent (YoY) with a realization of Rp 811.3 trillion or 98.15 percent of the target.

From the central government expenditure component, ministries/agencies’ spending has reached Rp876.4 trillion or exceeded the 2019 budget ceiling of Rp855 trillion. On the other hand, non-ministerial/institutional spending only reached 79.9 percent of the target of Rp622.6 trillion.

Until the end of 2019, the primary balance was in a deficit position of Rp77.5 trillion or reaching 385.3 percent of the target of the primary balance deficit of Rp20.1 trillion. In the same period in 2018, the primary balance experienced a much smaller deficit of Rp11.5 trillion, Indrawati adds.

Furthermore, budget financing reached Rp399.5 trillion or exceeding 134.9 percent of the ceiling of Rp296 trillion. The realization of budget financing grew by 30.7 percent YoY, inversely proportional to 2018 where the growth of budget financing experienced a contraction of -16.6 percent YoY.

US$1=Rp14,500

Written by Staff Editor, Email: theinsiderstories@gmail.com