Realization of Indonesia's budget deficit in the first half of 2013 reached IDR 54.5 trillion (USD $5.5 billion) or 0.58 percent of the country's gross domestic product (GDP). The figure is still well below the target that is set in the revised state budget of 2013, namely IDR 224.2 trillion (USD $22.6 billion) or 2.38 percent of GDP. As a percentage of GDP, the outcome of the deficit in the first half of 2013 was lower than that in the first half of 2012. However, if we compare it with the years 2010 and 2011, the budget deficit in the first half of 2013 is high.
Realization Budget Deficit/Surplus First Six Months:
||% of GDP
Target in State Budgets:
||% of GDP
The deficit in the first half of 2013 is due to government spending that exceeds state revenues. In the first six months of 2013 (I/2013), state expenditures have absorbed IDR 677.7 trillion, while state revenues and grants reached IDR 623.2 trillion.
The low realization of the deficit in I/2013 is due to non-optimal state spending. In I/2013, state expenditure only reached 39.3 percent of the target that is set in the 2013 state budget (IDR 1,726.2 trillion) and is also lower than in the same period in 2012 (40.7 percent).
A slowdown in the realization of state spending occurs both in central government expenditure and in the transfer of funds to Indonesia's regional governments. Central government spending, which includes capital expenditures, personnel, goods expenditure, subsidies, interest payments on debt, social spending, and grant expenditures absorbed only IDR 421,1 trillion or 35.2 percent of the target (IDR 1,196.8 trillion), and is lower than realization in I/2012 (36.8 percent).
Realized Government Spending in First Six Months:
| 2012 (%)
|| 2013 (%)
|Central Government Spending||36.8||35.2|
|- Goods Expenditure||22.4||22.2|
|- Capital Expenditure||18.2||18.1|
|- Payment of Debt Obligations||42.1||46.9|
|- Social Expenditure||54.5||32.3|
|- Other Expenditure||4.2||3.6|
|- Additional Expenditure||-||-|
|Transfer to Regions||49.2||48.5|
Minister of Finance, Chatib Basri, said that the realization of state spending in 2013 is far too low. After I/2013, the figure stood at 0.58 percent of GDP but should have been around 1.2 percent of the country's GDP. The low realization implies non-optimal government spending and, if the government wants to meet its target at the end of the year, it needs to undertake massive spending in II/2013. Considering that Indonesia's economic growth is under the threat of a slowdown to below the 6.0 percent line (YoY), government spending should be as optimal as possible. Moreover, considering that the government has borrowed money from domestic and international creditors, the government thus pays interest for loans that remain unused or unproductive.
In line with the State Budget law, the government's budget deficit should be kept below 3 percent of the country's GDP. But if we look at realized outcomes in recent years, it has never been able to come close to the 3 percent line.
Deficit Target and Realization:
In the original 2013 State Budget, the government targets a budget deficit of IDR 153.3 trillion or 1.65 percent of GDP. However, for the 2013 Revised State Budget, Indonesia's parliament and government agreed to raise the figure to IDR 224.2 trillion or 2.38 percent of GDP, which will be financed through the Budget Surplus (Saldo Anggaran Lebih) and securities (Surat Berharga Negara).