Although it may look too conservative, the 2014 state budget has been seen as realistic and could restore the government'€™s policy credibility ahead of a potentially jumpy global economy next year, economists have said.

The state budget, which was approved by the House of Representatives during a plenary session on Friday, targeted economic growth to reach 6 percent, inflation to hover at 5.5 percent, interest rate for the three-month treasury bills (T-bills) at 5.5 percent, and the exchange rate to trade at Rp 10,500 per US dollar next year.

To support such macroeconomic assumptions, total spending for next year has been raised 6.7 percent to reach Rp. 1.84 quadrillion, while total revenues have been lifted 11 percent to reach Rp 1.67 quadrillion.

'€œThere have been many suspicions that the government might push growth too high during the election year, but I think next year'€™s budget is realistic,'€ said David Sumual, the chief economist of Bank Central Asia (BCA).

He explained that if the government insisted on pushing growth too high '€” normally done by boosting spending '€” then it would lead to instability in the economy, with a widening of the current-account deficit and heavy pressure on the rupiah as consequences.

'€œThis shows that next year'€™s budget focuses on stability, which is good for the sustainability of Indonesia'€™s economic expansion in the medium and long term,'€ he said.

In his speech when unveiling the 2014 state budget draft in August, President Susilo Bambang Yudhoyono targeted economic growth to reach 6.4 percent '€” a target that was met with skepticism given the recent slowdown of the economy.

Indonesia grew only 5.8 percent in the second quarter, its slowest pace in nearly three years, as the country was hit by weak exports, a moderating trend of investments and high inflation that crippled household consumption.

Analysts have said that Indonesia has been biting more than it can chew, with 10 consecutive quarters of 6-plus percent economic expansion that was followed by few overheating signs in the economy, as evinced by the heavy pressure on the rupiah.

'€œToday'€™s approval of the 2014 budget, with a GDP growth target of 6 percent and tight monetary and fiscal policies, bode well for the economy and the currency when the global economy sees a recovery next year,'€ said Saktiandi Supaat, the head of foreign exchange research with Malayan Banking Bhd. in Singapore.

The gap between total revenue and spending is minus Rp 175.3 trillion, or 1.69 percent of the gross domestic product (GDP), which is far lower than this year'€™s deficit of 2.49 percent of the GDP, meaning the country is slated to have a healthier fiscal space next year.

To eliminate bottlenecks that have weighed on Indonesia'€™s economic growth, the government upped infrastructure capital spending '€” which includes funds for infrastructure projects '€” by 7 percent to Rp 205.8 trillion next year.

Despite concerns over budget abuse during the political year of 2014, the government cut two spending allocations that many deemed as susceptible to political agenda: subsidies and social assistance programs, which stand at Rp 333.6 trillion and Rp 55.8 trillion '€” each was lower at 4 percent and 32 percent, respectively.

'€œThe decline in both allocations is good, as it shows that the government does not intend on utilizing state funds for political purposes,'€ said Ahmad Erani Yustika, an economist with the Institute for Development of Economics and Finance (INDEF).

In his speech in front of lawmakers, Finance Minister Chatib Basri urged all ministries and institutions to improve the quality of budget realization, at the same time, ensured tight discipline in the supervision of the utilization of funds.