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Today's Headlines Budget Deficit

  • Fiscal Update Indonesia: Budget Deficit at 2.57% of GDP (Unaudited)

    At a news conference on Tuesday (02/01), Indonesian Finance Minister Sri Mulyani Indrawati said Indonesia's unaudited budget deficit reached 2.57 percent of the country's gross domestic product (GDP) in 2017, slightly below expectations at 2.60 percent of GDP, and well below the government's 2.92 percent (revised) target. In 2016 the government budget deficit was recorded at 2.49 percent of GDP.

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  • Government Proposes to Revise Indonesia's 2017 Budget Deficit

    The Indonesian government proposes to revise the budget deficit in the 2017 State Budget as it eyes an increase in spending but a cut in revenue (less-than-expected tax income) in the remainder of the year. On Thursday (06/07) Indonesian Finance Minister Sri Mulyani Indrawati handed the proposal to Commission XI of Indonesian parliament. The Finance Ministry now sees the shortfall rising to IDR 36.16 trillion (approx. USD $2.7 billion) in the 2017 budget.

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  • Macroeconomic Update Indonesia: Rupiah, GDP & Budget Deficit

    Agus Martowardojo, the governor of Indonesia's central bank (Bank Indonesia), provided some new forecasts with regard to Indonesia's economic growth and rupiah. On Tuesday (06/06) Martowardojo told at a parliamentary hearing that he expects the rupiah to depreciate modestly in 2018, while economic growth should accelerate. Meanwhile, Indonesian Finance Minister Sri Mulyani Indrawati said Indonesia's state budget deficit is estimated to widen slightly more-than-expected in 2017.

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  • Indonesia's 2017 Budget Deficit & Debt-to-GDP Ratio Considered Safe

    The government of Indonesia says the budget deficit (set in the state budget) and debt ratio are safe. In Indonesia's 2017 State Budget the government targets a 2.41 percent of gross domestic product (GDP) budget deficit (below the legal limit of 3 percent of GDP as stipulated by Law No. 17/2003). Meanwhile, Indonesia debt-to-GDP ratio was 28 percent at end-2016, a very comfortable ratio (for comparison, Japan's debt ratio exceeds 200 percent of GDP).

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  • Budget Deficit Indonesia Expected to Widen to 2.7% of GDP in 2016

    The government of Indonesia may again revise the budget deficit target in the Revised 2016 State Budget (APBN-P 2016). Due to the widening shortfall (primarily caused by weaker than estimated tax revenue collection), the Indonesian government now expects the budget deficit to reach 2.7 percent of the nation’s gross domestic product (GDP), up 0.2 percentage points from the target that was set previously. The new figure is close to the legal cap of 3.0 percent of GDP stipulated by Indonesian law (a law that was implemented to safeguard the nation's fiscal fundamentals).

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  • Fiscal Update Indonesia: Can the 3% of GDP Budget Deficit Cap Be Widened?

    A commission in Indonesia's House of Representatives advises the government to replace a law that sets a maximum budget deficit limit of 3 percent of gross domestic product. This law was implemented in 2003 after Indonesia experienced the devastating effects of the Asian Financial Crisis in the late 1990s. Traumatic experiences made the government decide to prioritize prudent fiscal policies. Although it is unclear what the exact consequences are if the government would breach this cap (perhaps an impeachment bid could be launched), governments always respected the cap.

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  • Fiscal Credibility Indonesia Supported by Tax Amnesty Program

    Foreign investors have increased holdings of government bonds by IDR 96.45 trillion (approx. USD $7.4 billion) between the start of 2016 and Wednesday 20 July 2016. In total, foreigners now hold IDR 654.97 trillion (approx. USD $50 billion) worth of Indonesia's government bonds. This reflects strong investor appetite for (relatively) safer state assets amid economic uncertainties related to looming monetary tightening in the USA, the Brexit issue and sluggish global economic growth, but it also shows that foreign investors have confidence in Indonesia's fiscal fundamentals.

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  • Volatile Day at the Office for the Indonesian Rupiah

    The Indonesian rupiah experienced a volatile day on Thursday (02/06), touching a four-month low in the morning after Indonesia failed to get investment grade status (yet) from global credit rating agency Standard & Poor's (S&P). However, at the end of the trading day the rupiah had appreciated 0.13 percent to IDR 13,643 per US dollar (Bloomberg Dollar Index). Most emerging Asian currencies appreciated against the US dollar today amid uncertainty about an imminent Fed Funds Rate hike.

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  • S&P Keeps Indonesia's Sovereign Rating One Notch Below Investment Grade

    Contrary to expectations, Standard & Poor's (S&P), the most conservative among the world's top three credit rating agencies, maintained Indonesia's sovereign debt rating at BB+ with a positive outlook. The BB+ rating is the highest junk level, one notch below investment grade. S&P left the door open for a future upgrade but the Indonesian government will need to enhance its fiscal performance. Issues that block an upgrade are rising budget deficits in the years ahead and the decline in Indonesia's corporate credit quality.

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Latest Columns Budget Deficit

  • No Pain, No Gain; Will Indonesia's Oil Production Be Back on Track?

    This year, Indonesia will have to face declining production numbers in its oil and gas sector. Gas output is assumed to decline by 14.77 percent compared to last year, while oil output will reach similar levels as in 2012, provided that there are no disruptions due to bad weather and leakages (a prerequisite that will be hard to meet).

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