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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Indonesia's crude oil production (oil lifting) in full-year 2016 is expected to reach 819,000 barrels of oil per day (bpd), slightly below the target that is set in the Revised 2016 State Budget (820,000 bpd). Amien Sunaryadi, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKKMigas), said oil production realization in Indonesia so far this year stands at 834,000 bpd. However, due to seasonal factors output is set to fall in September. Moreover, amid low oil prices Indonesia somewhat discourages oil exploration and production.

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Indonesia may achieve its oil target of 900,000 barrels of oil per day (bpd) in 2015 as the Banyu Urip field in Cepu (East Java) is expected to start production in February next year. Indonesian upstream oil and gas regulator SKKMigas stated that the oil field has now been completed for 92.5 percent. The oilfield’s early production facility is already producing 30,000 bpd. This is expected to increase to 165,000 bpd once production has reached its peak in mid-2015. This peak level is estimated to last for three years.

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It remains difficult for Indonesia to achieve oil production targets that are set by the Indonesian government. In fact, it is unlikely that Indonesia will meet this year’s revised oil lifting target of 818,000 barrels of oil per day (bpd) as set in the Revised 2014 State Budget. In the first half of 2014, Indonesia recorded an oil production rate of 797,000 bpd only. For almost two decades, Indonesia’s oil sector has been in a state of decline, evidenced by falling production rates, due to a lack of investments and aging oil fields.

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