Indonesian Government Revises State Budgets of 2013 and 2014
The government of Indonesia has revised the macroeconomic assumptions that are stated in the State Budgets (APBN) of 2013 and 2014 after a meeting with the budgetary body of the House of Representatives (Badan Anggaran DPR) on Wednesday (28/08). It is the third time that the 2013 State Budget has been revised in order to put it more in line with recent global developments. As the government was also too optimistic when drafting the 2014 Budget, it felt the need for a revision (only 12 days after the announcement of the Budget).
"The current macroeconomic reality of 2013 is not in line with the 2013 State Budget assumptions and thus adjustments are needed, also related to the 2014 Draft Budget," said Finance Minister Chatib Basri in Jakarta (28/8). For the macroeconomic assumptions of 2013, the biggest revision occurred in the pace of inflation. In the 2013 State Budget, inflation was set at 7.2 percent. Now, the target has been revised to 9.2 percent, a significant upward revision.
Factors that give rise to these inflationary pressures in 2013 include the uneffective national policies regarding the provision of domestic supplies (especially foodstuffs such as onions, beef and chili) and subsidized fuel price adjustments in late-June.
Another assumption that needed a sharp correction was the rupiah exchange rate. In the 2013 state budget, the exchange rate was set at IDR 9,600 per US dollar but due to the weakening trend of the currency its target has been revised to IDR 10,200 per US dollar. However, Chatib Basri acknowledges that this target is difficult to achieve considering the rupiah is expected to continue its weakening trend in the months ahead. The average realized exchange rate as of 26 August 2013 stood at IDR 9,852 per US dollar and IDR 10,841 on the average spot market.
The outlook for economic growth in 2013 has been lowered from 6.3 percent in the 2013 State Budget to 5.9 percent. Of the seven macroeconomic assumptions of 2013, only the 3-month state treasury securities rate (SPN) has not been revised.
| State Budget 2013 |
Realization per 31 July |
Outlook | |
| GDP Growth annual percent change |
6.3 | 5.9 | 5.9 |
| Inflation annual percent change |
7.2 | 8.6 | 9.2 |
| Exchange Rate IDR/USD |
9,600 | 9,852 | 10,200 |
| Treasury Bills Interest Rate 3-month, percent |
5.0 | 4.2 | 5.0 |
| Indonesian Crude Oil USD $ per barrel |
108 | 105 | 105 |
| Oil Lifting thousand barrels per day |
840 | 829 | 834 |
| Natural Gas Lifting barrel of oil equivalent/day |
1,240 | 1204 | 1207 |
| State Budget Draft 2014 |
Outlook | |
| GDP Growth annual percent change |
6.4 | 5.8 - 6.1 |
| Inflation annual percent change |
4.5 | 4.5 - 5.5 |
| Exchange Rate IDR/USD |
9,750 | 10,000-10,500 |
| Treasury Bills Interest Rate 3-month, percent |
5.5 | 5.5 |
| Indonesian Crude Oil USD $ per barrel |
106 | 106 |
| Oil Lifting thousand barrels per day |
870 | 870 |
| Natural Gas Lifting barrel of oil equivalent/day |
1,240 | 1,240 |
Revision of economic growth in 2013 from 6.3 percent to 5.9 percent was needed due to the country's higher inflation rate, a slowdown in the global economy and continued weak world trade. These conditions harm investments and export growth.
GDP Growth (%) 2013 per Category:
| State Budget Draft 2013 |
Outlook | |
| Household Consumption |
5.0 | 5.1 |
| Government Consumption |
6.7 | 3.4 |
| Gross Fixed Capital Formation |
6.9 | 5.3 |
| Export | 6.6 | 4.8 |
| Import | 6.7 | 1.8 |