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Deficit widens to US$46.3b as govt spending picks up
Tax revenue has fallen by 16.9 percent this year.
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Indonesia’s budget deficit has risen to Rp 682.1 trillion (US$46.3 billion) and is on track to reach the highest level in history this year as government spending increases and tax revenue dwindles. (JP/Mecca Yumna NP)
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ndonesia’s budget deficit has risen to Rp 682.1 trillion (US$46.3 billion) and is on track to reach the highest level in history this year as government spending increases and tax revenue dwindles, creating a need for debt financing.
The budget gap hit 4.16 percent of the gross domestic product (GDP) in September, well within the government’s forecast of a record-high deficit of 6.34 percent, Finance Ministry data shows. Finance Minister Sri Mulyani Indrawati said the latest data indicated an acceleration in government spending that would prop up the economic recovery.
“The government has succeeded in accelerating spending, which will be able to boost the economy in the third and fourth quarters,” Finance Minister Sri Mulyani Indrawati told reporters on Monday. “This is an all-out effort from us to revive the economy.”
State spending rose 15.5 percent from the same period last year to Rp 1.84 quadrillion, or 67.2 percent of the year’s target. Government spending rose 21.2 percent yoy to Rp 1.21 quadrillion as of September because of higher social and stimulus spending.
“We will maintain and accelerate government spending to drive economic growth, but other policy measures should become the drivers going forward,” she said. The other measures, Sri Mulyani said, included the Job Creation Law, which she said would support the economy and help maintain fiscal sustainability.
As of September, the government had collected Rp 1.15 quadrillion in state revenue, a 13.7 percent year-on-year (yoy) decline from last year because of falling tax revenue. Tax revenue itself, the main source of income for the government, fell by 16.9 percent yoy to 750.6 trillion because of a sharp fall in import taxes and a corporate income tax cut amid suppressed economic activity.
The budget deficit is expected to increase the government’s debt to 38.5 percent of GDP this year. It has sold Rp 790.6 trillion worth of debt papers so far this year.
