Government Proposes to Revise Indonesia's 2017 Budget Deficit

Currently the government's budget deficit in the 2017 State Budget is still set at 2.41 percent of Indonesia's gross domestic product (GDP). However, the latest revision would see the figure climbing to 2.67 percent of GDP (closer to the legal limit at 3 percent).

This 2.67 percent figure already includes the assumption that not all Indonesian ministries and government agencies will fully spend their budgets. In line with the recent trend, these ministries and agencies only spend - on average - 95 percent of their annual budgets. However, Indrawati added that in case all budgets would indeed be used to the full, then the budget deficit would still remain within the 3 percent of GDP cap (approx. 2.92 percent).

A recalculation of the government's budget composition - and ensuing higher budget deficit - was also necessary due to the latest data involving the government's subsidy programs for 3-kg LPG canisters, electricity and fuel. For example, the higher-than-initially-assumed crude oil price means the government has to raise spending for energy subsidies. Indrawati added that the government will also need to settle a fuel bill in the second half of the year (used by the Indonesian army).

The Indonesian government also wants to make more funds available for infrastructure development, improvement of prisons as well as preparations for the 2018 Asian Games that are hosted by Indonesia.

At the end of July 2017 the government and parliament (DPR) will sit together to discuss the latest (proposed) revisions.

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