The Indonesian government targets to narrow the budget deficit to between 1.9 and 2 percent of gross domestic product (GDP) in 2016 from a projected budget deficit of 2.2 percent of GDP in 2015. Indonesian Finance Minister Bambang Brodjonegoro said on Monday (06/07) that in 2016 the government will continue to prioritize spending on infrastructure development as well as energy and food. President Joko Widodo is scheduled to officially announce the 2016 State Budget in a speech in front of parliament on 16 August 2015.
Finance Minister Bambang Brodjonegoro shed some light on the 2016 State Budget when he said that the government plans to spend a total of IDR 2,200 trillion (approx. USD $165.4 billion) next year, while government revenue is expected to reach IDR 1,900 trillion (approx. USD $143 billion).
Brodjonegoro declined to provide exact figures on the amount of funds that will be allocated to infrastructure development spending in 2016, but did announce that the government plans to allocate more funds to infrastructure development compared to this year (the government allocated IDR 290 trillion to public infrastructure spending in 2015).
In 2016 the Indonesian government will continue to sell gasoline fuel on the Indonesian market (through state-owned energy company Pertamina) in line with global petroleum price fluctuations (at the start of 2015 the government scrapped subsidies for gasoline in order to assemble more funds for infrastructure development). The fixed subsidy of IDR 1,000 per liter for diesel also remains intact.
Due to the lessons learned from the Asian Financial Crisis in the late 1990s, Indonesian cabinets have been committed to prudent fiscal management in the post-Asian crisis period. As an illustration, during the decade-long Susilo Bambang Yudhoyono government, Indonesia’s debt-to-GDP ratio declined from around 42 percent in 2006 to 25 percent 2014.
Originally, the government targeted a budget deficit of 1.9 percent in the 2015 State Budget. However, as the Joko Widodo administration wanted to increase infrastructure spending, this deficit was raised to 2.2 percent of GDP. Moreover, tax revenue has not been in line with government assumptions. Public revenue from tax and excise stood at IDR 393 trillion (USD $29.5 billion) in the first five months of 2015, or a mere 26 percent of the target that had been set in the 2015 State Budget, due to lower commodity prices and slowing economic expansion of Indonesia (impacting heavily on companies corporate earnings and thus on tax payments to the government). Meanwhile, revenue from royalties and fees reached IDR 83 trillion (USD $6.2 billion) in the January-May 2015 period, or 30 percent of the government target.
State Budget Indonesia 2015-2016:
|Expenditures||IDR 1,984 trillion||IDR 2,200 trillion|
|Revenues||IDR 1,762 trillion||IDR 1,900 trillion|
Source: Jakarta Globe