TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Shortfall deepens budget hole
The state budget deficit in 2015 was far wider than had been estimated, the latest Finance Ministry data show, after numerous state income components fell short of their targets
Change Size
The state budget deficit in 2015 was far wider than had been estimated, the latest Finance Ministry data show, after numerous state income components fell short of their targets.
According to the data, the budget deficit widened to Rp 318.5 trillion (US$23.09 billion) or 2.8 percent of gross domestic product (GDP), far greater than the Rp 222.5 trillion, 1.9 percent of GDP, envisaged in the revised 2015 state budget.
The wider deficit was caused by low realization of revenue, especially tax revenue, with the government forced to seek alternative sources of financing to plug the gaping deficit, which approached the legal limit of 3 percent of GDP.
Finance Minister Bambang Brodjonegoro previously said that part of the additional funding would come from loans provided by several multilateral institutions, including the World Bank and Asian Development Bank (ADB).
Bambang brushed off concerns that growing external loans would put the state finances at risk. In an email sent to The Jakarta Post, he said that the country's debt-to-GDP level was still within a safe margin.
'Outstanding loans as per Dec. 31, 2015, reached Rp 3.09 quadrillion. That means the debt-to-GDP ratio stood at 27 percent, below the safe level of 60 percent as stipulated by Law No. 17/2003 on state finances,' he insisted.
Meanwhile, ministry data show that total government revenue reached Rp 1.49 quadrillion by the end of December, representing 84.7 percent of the target.
As widely predicted, the government failed to attain its ambitious tax revenue target, with net revenues of Rp 1.05 trillion, equal to 81.5 percent of the target.
Combined with customs and excise, total taxation revenues stood at Rp 1.23 quadrillion, falling short of the targeted Rp 1.5 quadrillion.
In a statement, the government attributed the disappointing revenues to the effects of a sluggish economy on the manufacturing and mining sectors, which in turn affected tax revenues from the two key sectors.
Weak commodity prices played a role as well, according to the statement, especially as they influenced the country's main exports, such as crude palm oil and mining products.
Falling coal and oil prices in the international market also led to a decline in non-tax revenues (PNBP). By year-end, non-tax revenues reached Rp 252.4 trillion, 93.8 percent of the targeted sum.
The government also missed its spending target as a result of the shortfall in revenue that would have been used to finance spending.
According to the statement, the government disbursed Rp 1.81 quadrillion, 91.2 percent of the year's total spending allocation.
The central government spent 90 percent of its own spending allocation, including funds disbursed through ministries and agencies, and channeled almost 94 percent of the funds reserved for regions and villages.
The government said that nomenclature changes at several ministries at the beginning of the year ' soon after the new administration took office ' had impeded optimum spending, but added that spending realization had picked up significantly in the third quarter onward.
Meanwhile, the government's latest estimate puts 2015 GDP growth at 4.73 percent and the inflation rate at 3.1 percent.
The economic growth rate will be lower than the previously forecast 5.7 percent; the Central Statistics Agency (BPS) is slated to announce the official result in February.
Maybank Indonesia economist Juniman and Bank Central Asia (BCA) economist David Sumual said the results were 'unsurprising' and stressed the ambitiousness of the government's original targets.
'The tax target was set too high; the annual increase should've been realistically set at 15 percent,' Juniman said.
Both economists urged the government to revise the 2016 state budget, calling for a more realistic outlook.
The government needed to revise down its targets, David said, as the economy was not set for any immediate major improvements.
______________________________________
To receive comprehensive and earlier access to The Jakarta Post print edition, please subscribe to our epaper through iOS' iTunes, Android's Google Play, Blackberry World or Microsoft's Windows Store. Subscription includes free daily editions of The Nation, The Star Malaysia, the Philippine Daily Inquirer and Asia News.
For print subscription, please contact our call center at (+6221) 5360014 or subscription@thejakartapost.com
