he Central Statistics Agency (BPS) predicts that budget cuts will not have a significant impact on the economy this year, which is expected to grow 5.2 percent year-on-year (yoy), as cuts were not related to vital spending.
The limited impact on the economy, according to BPS head Suryamin, was hinted at in President Joko “Jokowi” Widodo’s statement on Wednesday that productive spending — such as infrastructure projects — must be excluded from budget cuts.
“So, we expect it won’t have a significant effect on our economic activities. Of the Rp 133 trillion [US$10.14 billion] in budget cuts, Rp 65 trillion came from ministries and agencies’ operational budgets such as for meetings and official travel,” he said.
The country’s economy grew by 5.18 percent yoy in the second quarter of 2016, a significant increase compared to the previous quarter, which stood at 4.92 percent. It was above the central bank’s projection, which expected to see the second-quarter economy grow 4.94 percent.
Bank Indonesia projects the economy will grow 5.02 percent by the end of 2016, slightly below the government’s expectations at 5.2 percent. (ags)
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