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Jakarta Post

Indonesia’s budget deficit swells to $22.4b in July as revenue falls

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Tue, August 25, 2020   /   02:29 pm
Indonesia’s budget deficit swells to $22.4b in July as revenue falls Finance Minister Sri Mulyani Indrawati walks into the House of Representatives Commission XI meeting room in Jakarta on July 6. (Antara/Akbar Nugroho Gumay)

Indonesia recorded a budget deficit of Rp 330.2 trillion (US$22.4 billion), or 2 percent of gross domestic product (GDP), as of July as tax revenue fell further despite a slight increase in state expenditure, Finance Minister Sri Mulyani Indrawati said on Tuesday.

The country collected Rp 922.2 trillion in state revenue, marking a decrease of 12.4 percent year-on-year (yoy) following a drop in both tax revenue and nontax income. The sum is about 54 percent of the target for revenue to be collected this year.

Read also: Indonesia raises $1.5b from government bonds to fund fiscal deficit

Meanwhile, state expenditure rose 1.3 percent yoy to Rp 1.25 quadrillion as of July, which is 45.7 percent of the government’s full-year target.

“This shows that revenue was facing intense pressure while spending increased because of the coronavirus pandemic. That has a significant impact on a ballooning budget deficit,” Sri Mulyani told reporters in a press briefing.

Tax revenue, the main source of income for the government, fell by 14.7 percent yoy to 601.9 trillion due to a sharp fall in tax income from both the oil and gas sector and other sectors.

Read also: Indonesia’s 2021 state budget draft: What we know so far

Revenue had improved in June after the government eased social restrictions imposed earlier this year to curb the virus spread, but state revenue from some sectors, including trade and mining, deteriorated in July, the finance minister went on to say.

Government expenditure increased by 4.2 percent in July as the government spent Rp 793.6 trillion following a 55 percent increase in social aid spending. Other components of government spending fell.

The government had spent 25 percent of the Rp 695.2 trillion COVID-19 response budget as of August 19, Sri Mulyani said.

“The government will continue to monitor and increase economic recovery-related spending to make the recovery more stable and resilient going forward,” she added.