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2023 Budget Law aims for 2.84 percent shortfall to escape commodity-prices trap
The House of Representatives passed the 2023 state budget bill into law, restoring a targeted shortfall of below 3 percent, which has been detaining Indonesian fiscal expansion for the past three years due to the COVID-19 pandemic.
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Sri Mulyani speaking at Group of Twenty (G20) Tax Symposium, on July 14, in Bali. (Finance Ministry/Biro KLI)
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he House of Representatives passed the 2023 state budget bill into law, restoring a targeted shortfall of below 3 percent, which has been detaining Indonesian fiscal expansion for the past three years due to the COVID-19 pandemic, while also calculating the risk of a commodity-windfall finale.
The government set the 2023 budget deficit at 2.84 percent of GDP, much lower than this year’s revised figure of 4.5 percent. That target is equivalent to Rp 598.2 trillion (US39.31 billion), which drops by almost a third of this year’s revised Rp 840.2 trillion.
It also proves that the government has managed to keep its promise of not overstaying the “above 3-percent deficit policy” as mandated by 2020 law on COVID-19 response, which ordered the measure to end by 2023.
With a much lower deficit target, the government is also set to cut debt issuance to Rp 696.3 trillion, which is a 26 percent drop from this year’s revised Rp 943.7 trillion.
“We will ensure our financing scheme is carried out safely and carefully, especially in a situation where the global financial sector is experiencing enormous dynamics,” Finance Minister Sri Mulyani Indrawati told reporters after the plenary meeting on Thursday.
Read also: Govt raises 2023 revenue forecast, eyes more subsidies
Sri Mulyani lauds both much lower deficit and debt-issuance targets, as the world is facing risk due to an aggressive United States Federal Reserve rate hike that will make borrowing even more costly.
