Indonesian finance minister Sri Mulyani Indrawati decided to widen the 2019 State Budget deficit, from the initial planned at 1.84 percent of gross domestic product (GDP) - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – Follow the current development, Indonesian finance minister Sri Mulyani Indrawati decided to widen the 2019 State Budget deficit, from the initial planned at 1.84 percent of gross domestic product (GDP). But she declined the exact percentage of the deficit number.

Today, the ministry has announced to issue dual-currency bonds in US Dollar and Euro-denominated. The notes to be issued under the government’ existing US$10 billion shelf program. Is estimating the proceed will use to finance the State Budget’ deficit.

“I have issued a ministerial decree to widen the deficit and need more financing. (The amount) is not too large, we will continue to combine with a combination of domestic and international,” said the minister at the State Palace in Jakarta today (10/24).

According to her, at this time, internationally the interest rates are very low and will give the government the opportunity to find the best financing for Indonesia. She asserted, the country need to widen the deficit caused the realization of tax revenues is estimating far from the target. 

This year, the government revenues from tax is estimating will shortfall Rp140 trillion. In 2019, the ministry targeting to raise tax revenues Rp1,786.4 trillion.

“Because of the pressure from enormous revenues, especially from the economic conditions, our economic actors, especially in the manufacturing and mining sector is decreasing quite dramatically so we see the deficit will likely widen,” said the minister.

Based on the government data, in this year the economic growth being targeted at 5.3 percent, inflation at 3.5 percent, Rupiah at 14,400 against the US dollar, and the rate of treasury bills at 5.3 percent.

Admitting that there is potential negative impact from the government’ import policies, she pointed out that the government will manage the imports in such a way not to negatively impact economic growth while minimizing impact to the increase of current account deficit.

The finance minister also said that the government will also try to find the best way of anticipating the change of consumption preferability among the public who tend to save their funds rather than investing to the real sector.

“Other than we’ll keep anticipating the potential global pressures, from the US Federal Reserve and current trade wars between the US and China and other countries,” she said.

Other macroeconomic assumptions approved during the hearing are the unemployment rate which is set at 4.8-5.2 percent, poverty rate at 8.5-9.5 percent, economic inequality at 0.38-0.39 percent, and Human Development Index at 71.98.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com