Indonesian government and House of Representatives have agreed on 2020’ macro assumptions - Photo: Special
JAKARTA (TheInsiderStories) — Indonesian government and House of Representatives have agreed on 2020’ macro assumptions to decide by the Budget Committee in this month. Next year’ economic growth and currency exchange are set differently than the initial proposal.
For 2020, the economic growth set in the range 5.2 to 5.5 percent, lower than the previous target at around 5.3 percent to 5.6 percent.
“The economic growth represents realistic element. But we also put optimistic (target) at 5.6 percent,” said Finance Minister Sri Mulyani Indrawati to the Commission XI members on Monday (06/17).
According to her, Indonesia needs Rp5,802 trillion (US$405.73 billion) to achieve the 5.3 percent economic growth. She aims for 7 percent to 7.4 percent investment growth in 2020, amid global financial turmoil. As one of the tactics in reaching the investment target, Finance Ministry planned on giving incentives to regional government that could boost investment and export.
“In essence, they (local governments) are competing to improve the criteria for attracting investment and exports,” said the minister.
For that, she revealed, the authority will modify regional incentive funding indicators. Recently, the indicator is related to governance, financial report audit status, and development.
Later on, the incentive is also expected to improve investment licensing, in accordance with the investment easing by central government through Online Single Submission.
The meeting also agreed on the target for stronger Rupiah exchange rate at 14,000 to 14,500 over the Greenback. Formerly, government seemed not too optimistic with the currency exchange condition by setting the target at 14,000 to 15,000 against the US Dollar.
Beside, both parties also agreed on the inflation target at 2 to 4 percent, and three-month letter of state treasury rate in a range of 5 – 5.5 percent. This also different from the House suggestion at 5 to 5.3 percent. But Indrawati noted that the range is irrelevant because the recent rate has reached 5.8 percent.
During the state budget discussion with legislative last week, she explained that some of the macro assumptions in 2019 wouldn’t be achieved, such as economic growth, three-month letter of state treasury interest rate, Indonesia Crude Price, and the oil lifting target.

Last May, the government officially submitted state revenue and expenditure budget draft for 2020 to House of Representatives. In the draft, macro assumptions set are not much changing compared to the challenging 2019.

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

The inflation is projected to be maintained at 3 percent, with 1 percent deviation each for below and above from 2019 at around 3 to 4 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 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 is predicted in a range of US$60 – $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.

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 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.

US$1: Rp14,300

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