There has been rising speculation in Indonesia in recent months that Indonesian President Joko Widodo will decide for another cabinet reshuffle as several ministers are held responsible for the disappointing performance of their ministries (that have reacted too slow to implement new government guidelines, for example those guidelines set in the series of economic policy packages that have been released since September 2015). On 12 August 2015, Widodo had already reshuffled his cabinet, replacing six ministers.
After more than one and a half years in charge of Southeast Asia's largest economy, President Widodo is in need of enhancing the quality and efficiency of government policy and actions as the country's economic growth has remained sluggish in the first quarter of 2016. In Q1-2016 Indonesia's gross domestic product (GDP) reached 4.92 percent (y/y), missing analyst estimates and being far below the 7 percent (y/y) economic growth pace that is targeted by Widodo toward the end of his presidential term in 2019.
Realization of government spending in the January-May 2016 period reached IDR 357.4 trillion, higher than the IDR 330.2 trillion spent in the same period last year but only equivalent to 32.7 percent of the IDR 2,095.7 trillion budget ceiling in the 2016 State Budget. If there remains unrealized government spending by the end of the year, it implies there were missed opportunities.
Meanwhile, Indonesia's government revenues as of May equaled 27.2 percent of the target set in the 2016 State Budget (IDR 1,822.5 trillion), primarily caused by weaker-than-targeted tax revenue collection and the lower-than-estimated Indonesian crude price. This prompted the government to propose a wider budget deficit target of 2.48 percent of GDP this year.
At last week's plenary cabinet meeting Widodo expressed his dissatisfaction regarding the achievements of the central government so far this year, particularly regarding slow government spending. Reportedly, only a few ministries - including the Public Works & Housing Ministry and the Transportation Ministry - are on schedule in terms of budget spending.
Read more: Joko Widodo Reshuffles Cabinet (August 2015)