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Govt estimates economy to grow only 5.1 percent
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Cutting: Finance Minister Sri Mulyani Indrawati (second right) in a meeting with House of Representatives Commission XI on Aug. 31 in Senayan, Jakarta. The meeting discussed a budget cut and progress of the tax amnesty. (Antara/Sigid Kurniawan)
T
he government projects the economy will grow by only 5.1 percent this year, 0.1 percent below the target of 5.2 percent set in the revised 2016 state budget due to budget cuts, Finance Minister Sri Mulyani Indrawati said on Wednesday.
In a meeting with House of Representatives Commission XI on finance, Sri Mulyani said due to the shortfall, estimated at Rp 219 trillion in state revenues by the end of this year, the government had decided to cut the budget by Rp 137 trillion.
She said this would cause a contraction in economic growth. However, the government must take this action in a bid to correct the bubble in the state account.
"Considering its impact on economic growth, Bank Indonesia has reduced it projection for economic growth by 0.1 percent. The Finance Ministry's Fiscal Policy Office (BKF) will conduct an assessment and modelling, and we expect there will be a correction of 0.1 percent to growth," Sri Mulyani said.
Earlier, the central bank estimated growth at 4.9 to 5.3 percent for this year, a slight decrease from the previous estimate of between 5 and 5.4 percent, despite robust growth in the first half.
The lower target was set after the government revised this year's state budget expenditure by slashing allotments, leading to lower government spending in the second half. (evi)
