Weak revenue collection the real problem, not deficit

Glenn Polii
Staff member at the Directorate General of Taxation at the Finance Ministry

PREMIUM

Jakarta / Wed, August 23, 2017 / 10:38 am

Weak revenue collection the real problem, not deficit

If the budget is ever to be credible and sustainable, the performance of the tax system must be significantly improved. (Shutterstock/File)

The 2018 budget proposal calls for Rp 2.20 quadrillion (US$165 billion) in spending and requires the government to run a Rp 326 trillion deficit. With an aggressive assumption of 5.4 percent growth in gross domestic product (GDP), this deficit translates to 2.2 percent of GDP. This figure is significantly lower than the estimated 2.9 percent deficit this year, which comes within a hair’s breadth of breaching the legal limit of 3 percent. Some analysts and political figures have raised concerns over the matter of persistent deficit and an ever-increasing public debt. They pointed out that within the first 2.5 years of the Jokowi administration, the current government has accumulated the same amount of debt that took the previous administration five years to reach. The sheer level of debt, which stood at Rp 3.78 quadrillion as of the end of July, makes some people nervous an...