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.
Subsidies, social aid to stretch budget deficit close to limit
Government projections point to a sharp increase in the gap between state expenditure and revenue this year amid massive spending on social aid and subsidies.
Change Size
Coordinating Economic Minister Airlangga Hartarto (left) and Agrarian and Spatial Planning Minister Agus Harimurti Yudhoyono pose for photographs after a meeting at the Office of the Coordinating Economic Minister in Jakarta on Feb. 26, 2024. (JP/Deni Ghifari)
Government projections point to a sharp increase in the budget deficit this year amid massive spending on social aid and subsidies.
Speaking to reporters in his office on Monday, Coordinating Economic Minister Airlangga Hartarto said the 2024 budget deficit was now seen at 2.8 percent to GDP.
That is far above the figure of 2.3 percent stated in the state budget plan for this year.
“It was decided in the cabinet meeting that there will be no [price] hike for electricity and no hike for fuel until June, whether subsidized or unsubsidized,” said Airlangga.
That decision suggests the government will allocate more funds to keep energy cheap for consumers through subsidies and by giving “compensation” to electricity monopoly PLN and oil and gas company Pertamina in return for expecting the state-owned firms to sell their commodities below market prices.
Together, the measures weigh heavily on state coffers.
An additional Rp 14 trillion (US$894 million) is to be spent on fertilizer subsidies, on top of the Rp 26 trillion initially earmarked for the program. Airlangga said the increase was necessary given the “steep decline” in rice production.
