Having pinned high hopes on the new government, international analysts have now become skeptical over the economic reforms previously announced by President Joko '€œJokowi'€ Widodo as realization of his promises has been sluggish.

In a report entitled '€œTrimming Expectations'€ released on Wednesday, Bank of America Merrill Lynch cut economic growth projection for Indonesian to 5.5 percent this year, from its earlier estimate of 5.7 percent.

The US-based bank also cut its 2016 growth projection to 5.7 percent from 6 percent earlier, citing '€œslow'€ progress on the realization of infrastructure investment.

'€œInfrastructure investment has been subdued over the past decade and should recover under President Jokowi'€™s watch,'€ said Chua Hak Bin, an economist with Bank of America Merrill Lynch.

'€œBut progress is slow so far, in part because of complex land acquisition process, weak implementation capacity and poor inter-agency coordination,'€ he noted.

Jokowi based his growth-minded economic agenda on the ambitious infrastructure spending plan, as he allocated approximately Rp 290 trillion (US$22.38 billion) in capital expenditure (capex) in the 2015 state budget, up from Rp 190 trillion last year.

However, recent developments show that budget disbursement remains sluggish, just as in past years. This occurred despite the reforms floated by Jokowi, including his instruction to kick-start state-contract tendering in March instead of June as is the norm.

In the first quarter of this year, the government disbursed only 18.5 percent of total state spending of Rp 1.98 quadrillion. Meanwhile, the Public Works and Housing Ministry, which is responsible for infrastructure projects, had spent only 3 percent of its budget by the end of March.

The situation sees the government facing a serious risk of underspending in the capex budget allocation, Chua added.

'€œOur concern is that a potential cut in expenditure of Rp 100 trillion may come, mostly in the form of a cut or delay in capital expenditure,'€ commented Reza Siregar, an economist with Goldman Sachs, another US-based investment bank.

Reza also noted that there were '€œquestions on the viability of the key targets of the newly revised 2015 budget'€, cautioning against a possible swelling in the fiscal deficit as a result of the unrealistic revenue collection target.

This year, Jokowi has targeted tax collection of Rp 1.48 quadrillion, a 30 percent increase from a year earlier.

This is an overly optimistic target, according to Goldman Sachs, which predicted that the maximum growth in tax revenues this year might stand at only 15 percent.

Caution over Jokowi'€™s economic reform progress was also shared by ratings agency Standard and Poor'€™s (S&P), which has refused to upgrade its credit rating for Indonesia.

This week, S&P'€™s executives met local analysts and media representatives in Jakarta and announced the ratings agency'€™s decision to maintain Indonesia'€™s rating at BB+, or one notch below the prestigious investment-grade status.

A country with an investment-grade rating normally sees stronger foreign inflows, compared to one rated in speculative or junk grades.

'€œThe S&P sees a considerable risk. It sees the emerging of '€˜less friendly'€™ business policies that could potentially negate the fuel subsidy reform,'€ Mandiri Sekuritas analyst Aldian Taloputra and Leo Rinaldy, who attended the meeting with S&P, wrote in a note distributed to clients on Wednesday.

'€œIt wants to assess whether the government is consistent on its reform path if the external or internal pressures, including political pressure, intensify,'€ they noted.

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