finance minister Sri Mulyani Indrawati, stated that 2019 State budget deficit will be widen to 2.2 percent of gross domestic product (GDP) amid the global uncertainties - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesia’s state budget deficit swelled to Rp281,9 trillion (US$20.13 billion) or 1.8 percent of the gross domestic product (GDP) in October 2019, higher than the same period year earlier of Rp229.7 trillion or 1.56 percent of GDP, the finance ministry has announced today (11/18). At the end of the year, the government is targeting a budget deficit of Rp296 trillion or 2.26 percent of GDP.

This is due to unsatisfactory revenue due to pressure on several sectors such as manufacturing and mining, finance minister Sri Mulyani Indrawati told a press conference.

State revenue was recorded at Rp1.508.9 trillion or 69.7 percent of the target. The country’s income was recorded to only growing 1.2 percent year-on-year (YoY), lower than the growth in October 2018 which reached 21.3 percent (YoY).

Total tax revenue from January to October was recorded at Rp 1,173.9 trillion. The number is still 65.7 percent of the target. While non-tax state revenue is at Rp 333.3 trillion. With two months remaining, this number is still 88.1 percent of the target.

According to Indrawati, the sluggish tax and non-tax revenue due to the realization of macro assumptions that are not in line with the estimates. The minister gave an example of the realization of Indonesian oil prices which are still at US$62 a barrel, while the macro assumption is at $70 a barrel.

Then oil lifting since the beginning of the year averaged at 744,000 barrels a day, assuming 775,000 barrels a day. While the average exchange rate of the rupiah against the US dollar since the beginning of the year is at Rp14,162, assuming that in the 2019 State Budget it is Rp15,000.

“With lifting under the assumption, oil prices and the exchange rate will certainly affect tax and non-tax revenues which are definitely lower,” she said.

Furthermore, the total state expenditure until the end of October grew by 4.5 percent (YoY) with a realization of Rp1.798 trillion or 73.1 percent of the target. Central government expenditure was recorded at Rp 1,121.1 trillion (68.6 percent) and transfers to the regions were Rp 676.9 trillion (81.9 percent).

With this, the debt withdrawn by the government as of October reached Rp384.5 trillion, or already 107 percent of the state budget income and expenditure target. The remaining budget financing was recorded at Rp84.3 trillion.

Indrawati said the debt was deliberately withdrawn in nominal terms given the considerable momentum of global interest rate cuts.

“We are doing a frontloading strategy because of the downward trend in interest rates,” the minister said.

US$1=Rp14.000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com