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Reduced budget deficit forecast for 2008: Government
Indonesia's budget deficit is forecast to drop to 1
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Indonesia's budget deficit is forecast to drop to 1.1 percent of the country's gross domestic product (GDP) this year due to lower-than-expected spending and a rise in tax revenues, the Finance Ministry says.
"The realization of expenditure throughout the year is forecast to reach 90 percent *of the budget*, while we project tax revenue will reach 105 percent. Therefore, we project only a 1.1 percent deficit," Anggito Abimanyu, the ministry's head of fiscal policy, said Thursday.
The ministry has earlier predicted a deficit of 1.9 percent of GDP, or Rp 90.6 trillion.
Tax revenue makes up about 70 percent of state revenue, which is projected to reach Rp 894.99 trillion in the 2008 budget.
A lower deficit means the government could cut issuance of bonds at a time when market appetite has decreased towards financial instruments, due to the global financial crisis.
The government has cut the amount of net bonds issuance required from Rp 117.79 trillion to Rp 115.79 trillion. It bought back Rp 327 billion of bonds on Nov. 12, its second repurchase in two weeks, to restore investors' confidence. It bought back Rp 41 billion of bonds on Oct. 30.
Anggito added the government had a surplus in its balance, meaning that available funds could be used to fund the 2009 budget.
"In 2009, the conditions are uncertain. An economic slowdown may adjust the 2009 forecast."
The government has provided a total of Rp 12.5 trillion in incentives -- mostly in the form of reduction or elimination of taxes and import duties -- to industries next year to stimulate the real sector.
Only industries operating in the food, energy, public service and selected sectors will receive such benefits, Anggito said.
The ministry expects Indonesia's economy to grow by slightly above 6 percent in 2008, after estimating the budget conditions. "The economy this quarter will be slightly below 6 percent, but overall 2008 (economic growth) will be above 6 percent."
According to the Central Statistics Agency, the economy grew by 6.3 percent in the first nine months of 2008.
