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2024 budget deficit smaller than anticipated

Last year’s budget closed with a deficit of Rp 507.8 trillion (US$31.34 billion), 2.29 percent of the country’s gross domestic product (GDP), Finance Minister Sri Mulyani Indrawati revealed in a press conference on Monday.

Deni Ghifari (The Jakarta Post)
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Mon, January 6, 2025

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2024 budget deficit smaller than anticipated Finance Minister Sri Mulyani Indrawati stands before the press for a photoshoot prior to a press conference in her office building in Jakarta on Mar. 25, 2024. (JP/Deni Ghifari)

T

he 2024 budget deficit was significantly smaller than anticipated, partly thanks to easing external pressures in the second half last year, with experts suggesting this will help the government to better maintain fiscal stability amid uncertainties that may unfold in 2025.

Last year’s budget closed with a deficit of Rp 507.8 trillion (US$31.34 billion), 2.29 percent of the country’s gross domestic product (GDP), Finance Minister Sri Mulyani Indrawati revealed in a press conference on Monday, which means the government raked in less revenue than it spent and it required debt financing to fill in the gap.

That figure fell below the Rp 609.7 trillion, 2.7 percent of GDP, projected in August, which Sri Mulyani had attributed to “extraordinary pressures” during the first half of the year and which could possibly be prolonged to the rest of the year.

Those pressures included the impact of the weather phenomenon El Nino, which disrupted food production and inflated prices globally, as well as heightened geopolitical tensions, including in the Middle East, that translated into higher oil prices at around $80 to $90 per barrel.

Sri Mulyani then cited the United States Federal Reserve’s hawkish signals throughout most of last year’s first half that in turn dashed the hope for a domestic interest rate cut needed to ease borrowing costs and spur economic activity.

Some of Indonesia’s main export commodities namely coal, nickel and crude palm oil (CPO) also performed better in the rest of the year. Moreover, China’s stimulus announced in the second half also raised hopes of a Chinese economic recovery, the impact of which could also benefit Indonesia.

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“Even though the escalation [risk] of the war in the Middle East remained, the oil price pressure subsided,” said Sri Mulyani, pointing out that the oil price leveled to about below $80 per barrel in the second half of last year.

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