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Over-optimistic revenue target forced budget cuts: Economist
An economist has praised the government’s decision to cut spending by US$10.17 billion this year and said assumptions on state income were too optimistic to begin with.
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Institute for Development of Economics and Finance (INDEF) economist Berly Martawardaya (right) and Administrative and Bureaucratic Reform Ministry expert team head Indra Jaya Piliang speak at a seminar in Jakarta in May 2015. (tribunnews.com/Herudin)
A
n economist has praised the government’s decision to cut spending by US$10.17 billion to $149.26 billion and said assumptions on state income were too optimistic at the beginning of the budgeting process.
Finance Minister Sri Mulyani Indrawati on Wednesday predicted that the budget deficit would reach 2.5 percent of the gross domestic product (GDP) this year rather than the 2.35 percent planned in the revised state budget. Despite the spending cut, the minister lifted the debt target by $0.13 billion to $20.91 billion.
"That means she revised down the state income [expectation] by $10.3 billion to $128.35 billion, a 7.43 percent decrease. She is realistic about the state revenue, and the spending cut prevents us from issuing too much debt," Institute for Development of Economics and Finance (INDEF) economist Berly Martawardaya told thejakartapost.com on Thursday.
The Finance Ministry's director for government bonds, Lotto Srinaita Ginting, said the government would jack up the issuance of dollar-denominated government debt papers (SBN) to absorb the repatriated assets in the tax amnesty program.
"Our global bond offering period is over, thus we will offer debt securities. Currently, 23 percent of domestic SBN issued in 2016 is denominated foreign currency; we can increase it to 27 percent," she said.
Meanwhile, Public Works and Public Housing Minister Basoeki Hadimuljono underlined that the second budget cut would not hamper prioritized programs on infrastructure, as spending cuts would focus on operational expenses. (ags)
