JAKARTA (TheInsiderStories) — Global economic turmoil has made Indonesia pessimistic about achieving some of the macro assumptions target this year, as stated by finance minister Sri Mulyani Indrawati, in hearing with House of Representatives yesterday. Economic growth, treasury, to energy are some of the points hit by such condition.
“In the 2019 state expenditure revenue budget macro assumptions, economic growth is predicted to be on pressure,” said Indrawati at the hearing with parliament on Thursday (06/13).
Indonesian government targeted economic growth at 5.3 percent this year. Without mentioning how much pressure it would impact Indonesia’ Gross Domestic Product (GDP), Indrawati explained that even World Bank revised global economic growth by 0.3 percent to 2.6 percent.
Moreover, she opined, the 5.3 percent target three months letter of state treasury would also be on pressure, although worries over global interest rate hike will drastically change in the second semester. Not only that, Indrawati added, Indonesia Crude Price is going to be lower than US$70 per barrel assumption and the lifting target may also not be achieved. For this year, government eyes 775,000 barrels of oil per day, and 1.25 million barrels of gas per day.
With such conditions, she couldn’t deny that there are also risks in taxation which will impact the government’ revenue. Non-tax state revenue is also predicted to slump contributed by natural resources price downturn.
Even so, she estimated that inflation will still be on target at 3.5 percent. Meanwhile, the currency exchange will be stronger than the prediction at Rp15,000 per US Dollar.
Amid the possible unachieved target, the minister assured that government expenditure will be on track. Government targeted expenditure realization at 94-97 percent, with the absorption at 96-98 percent. She stressed that the deficit will still be maintained according to state budget law.
Some of the unachieved projections, according to her, visualized downside global economic risk impacted by United States – China trade war. Moreover, the uncertain Brexit, commodity price dynamics, geopolitic condition, and China’ economic growth also impacted Indonesia’s macro economy target.
The global economic turmoil would cause export decline, investment fallout, and revenue slash of commodity-based companies.
Indonesia has no choice to suffered Rp102 trillion (US$7.13 billion) deficit in the first quarter (1Q) of 2019. The deficit’ portion to the Gross Domestic Product (GDP) was 0.63 percent.
The state revenue recorded Rp350.1 trillion, while the spending was Rp452.1 trillion. Indonesia’ macroeconomy basic assumption realization is still on target.
Inflation recorded at 2.48 percent year-on-year. Rupiah against US Dollar is below the assumption at Rp15,000 and the crude price is lower than the under the estimation $70 a barrel.
But Government’ debt is swelling. As in March, the debt recorded at Rp4,567.31 trillion, or 10 percent increase from the previous year. The debt consists of Rp3,776.12 trillion government securities and Rp791.19 trillion loan from several sources.
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