T

he government has dismissed concerns over next year’s smaller state budget, arguing that the reduced state spending will still allow for various infrastructure projects.

The total spending figure, as reported before, stands at Rp 2.07 quadrillion (US$156.66 billion) for 2017, 0.6 percent lower compared to what was earmarked for this year, while spending by ministries and agencies—which is a key component of spending— has been cut by 1.2 percent to Rp 758.38 trillion, according to the budget draft.

“If we compare the figures with those in the revised 2016 state budget, they are down,” Finance Minister Sri Mulyani Indrawati said recently.

However, she argued that the 2017 spending would in fact be higher after the government completed its austerity plan this year by shaving Rp 133.8 trillion off the revised budget as a result of unsatisfactory revenue collection.

The cut itself will leave total spending at Rp 1.95 quadrillion in 2016.

Not all ministries will suffer budget cuts. The Public Works and Public Housing Ministry and Transportation Ministry—the two ministries that spearhead President Joko “Jokowi” Widodo’s government’s grand infrastructure design— will see their spending allocation rise, albeit by a small percentage.

The Public Works and Public Housing Ministry, for instance, will get Rp 105.56 trillion next year, up 8.7 percent from the revised 2016 budget or up 5.7 percent if the government cuts Rp 2 trillion as part of the austerity measures.

The ministry’s secretary general Taufik Widjoyono said it would get assistance from the newly established National Asset Management (LMAN) public service agency.

The LMAN is under the authority of the Finance Ministry, but is tasked with acquiring land needed for various infrastructure projects.

Now that the land acquisition issue is practically solved, the Public Works and Public Housing Ministry will be able to focus its spending allocation on non-land issues, as well as to continue several multiyear projects that it began in 2016, Taufik said.

The budget draft shows that the ministry has several projects prepared for next year, including the construction of 815 kilometers of roads, 9,399 meters of bridges and 20 dams.

Meanwhile, the Transportation Ministry will obtain Rp 48.7 trillion in next year’s budget, 13.5 percent
higher than this year. The ministry’s secretary general Sugihardjo acknowledged that the figure was Rp 1.78 trillion less than what it had expected.

He added that spending would be cut to adjust to the new budget, but said that it would mostly be unproductive spending, such as on seminars and work trips, while the government’s maritime highway program would be spared from cuts.

The Transportation Ministry is slated to carry out various projects, namely the constructions of 14 airports and 50 pioneering ships.

Separately, BMI Research says in a note that next year’s more grounded revenue and expenditure projections mark a conscientious effort by the Jokowi administration to improve the accuracy of its fiscal scheduling and it is a positive development.