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JAKARTA (TheInsiderStories) -The Indonesian government is considering to cut the central government’s expenditure amounting to Rp65 trillion and Rp68.8 trillion budget allocation to regional governments due to lower-than-expected tax revenues this year, Finance Minister Sri Mulyani Indrawati said.
Minister Sri Mulyani said that she has reported to the President and Vice President at the Cabinet Meeting on Wednesday on potential cut.
She said the projected tax income is based on tax revenues in the past three years, which may not be suitable for this year on the back of slowdown national and global economic growth.
In 2014, the realized tax revenues was Rp100 trillion below revised 2014 State Budget. In 2015, the realized tax revenues were Rp248.9 trillion below target. Therefore adjustments are needed, she said.
She however noted that the planned cut does not mean that any efforts to boost tax income will be eased, but it should be the other way around. The government will continue to step up efforts to boost tax revenues.
“Therefore, in 2016, the tax income is projected to be Rp219 trillion below target. We need to make adjustments on the expenditure side, in order to ensure that the budget deficit is well guarded at a level that won’t cause confidence crisis on the State Budget,” she said.
She said the expenditures will be cut in some government ministries and agencies, which are considered not priority expenditures. This will include expenditure for official travelling, preparation and expenditures to build new buildings.
“We will coordinate with the Coordinating Ministry for the Ecnomy and the National Development Planning Agency (Bappeas) to identify which expenditures that will be cut,without reducing the government’s commitment to develop priority programs such as infrastructure, education, compensations (for teachers) and health expenditures,” Sri Mulyani said.
“Expenditures for priority programs will not be cut,” the Finance Minister said.
The budget cut for regional governments is basically related with profit-sharing funds due to lower-than-projected tax.
“Nevertheless, we will try to find room in the State Budget to stimulate the economic growth with more accurate projected expenditure and revenues,” she said.
2017 Draft Budget
As for the 2017 draft State Budget, the government will maintain the current macro economic assumptions, namely growth at 5.3 percent, interest rate at 5.3 percent, exchange rate at 13,300, oil price at US$45 per barrel and oil lifting 780,000 barrels per day. The President will deliver introduction speech on the 2017 Draft Budget in mid month, August 16, one day before Independence Day celebration.
She said the government will focus on priority programs in the 2017 draft State Budget, such as acceleration of infrastructure development, health, education and poverty alleviation programs. (*)
