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Jakarta Post

Government struggles to reduce deficit

Anton Hermansyah (The Jakarta Post)
Jakarta
Tue, June 13, 2017

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Government struggles to reduce deficit Finance Minister Sri Mulyani Indrawati (left) and director general of taxation Ken Dwijugiasteadi attend a hearing with the House of Representatives. (Antara Photo/M Agung Rajasa)

T

he government is still struggling to reduce the deficit for the 2018 State Budget to below Rp 100 trillion (US$7.52 billion) from Rp 109 trillion in the 2017 State Budget.

Finance Minister Sri Mulyani Indrawati said the government would reduce the deficit to between Rp 50 and 99 trillion in 2018.

"We will further reduce the primary deficit to zero, then we will have a surplus," she said during a meeting with the House of Representatives Commission XI, overseeing financial affairs, in Jakarta on Monday.

Since 2012, Indonesia has run a deficit, Sri Mulyani said, adding that this was caused by the ending of the commodities boom, which significantly reduced the government's revenue.

(Read also: Lower budget deficit seen in first two months)

In 2018, the government will still need to issue debt with a value of around 0.3 to 0.5 percent of the gross domestic product (GDP).

As spending increases to between Rp 2.2 quadrillion and 2.35 quadrillion in 2018, the budget deficit will amount to between 1.9 and 2.3 percent of GDP, a bit lower than the 2.41 percent of GDP in the 2017 budget.

Sri Mulyani said the government would diversify the source of debt to reduce costs. The government is aiming for the three-month debt paper (SBN) yield to be around 3.8 to 4.6 percent compared to 5.3 percent in 2017. (bbn)

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