Macroeconomic Assumptions Indonesia to be Discussed in House
The House of Representatives of Indonesia (DPR) is scheduled to meet on Thursday (22/10) to discuss the government's revised 2016 macroeconomic assumptions. In August 2015, Indonesian President Joko Widodo had unveiled the government's draft 2016 State Budget. However, due to overly optimistic assumptions, there has been the need for several revisions.
Indonesia's economic growth target in the draft 2016 State Budget is revised down to 5.3 percent (y/y) from an earlier target of 5.5 percent (y/y). The revision is proposed in order to make the government state budget more realistic given the sluggish global economic growth outlook, particularly on slowing economic growth in China.
Both government revenue and spending are proposed to increase in 2016. This may be overly ambitious as this year's targets (government spending at IDR 2,096 trillion and revenue at IDR 1,823 trillion) will most likely not be achieved due to weak tax income and sluggish government spending (caused by red tape and weak coordination between the central and local governments).
The rupiah is projected at IDR 13,900 per US dollar by Indonesia's central bank (Bank Indonesia) as the currency remains under pressure mainly because of looming higher US interest rates.
Indonesian Rupiah versus US Dollar (JISDOR):
| Source: Bank IndonesiaRecently, Indonesian Finance Minister Bambang Brodjonegoro said the government's 2015 budget deficit is expected to remain below 2.5 percent of GDP despite weak tax revenue. The government only managed to collect IDR 686 trillion (approx. USD $50.8 billion) in tax revenue (excluding excise and export-import duties), or 53 percent of the government's full-year 2015 target (IDR 1,294 trillion), as of 5 October 2015. In the revised 2015 State Budget the government's budget deficit was set at 1.9 percent of GDP.
Indonesian Macroeconomic Assumptions:
| State Budget Draft 2016 |
|
| Government Spending in trillion IDR |
2,096 |
| Government Revenue in trillion IDR |
1,823 |
| Budget Deficit percent of GDP |
2.15 |
| GDP Growth annual percent change |
5.3 |
| Inflation annual percent change |
4.7 |
| Exchange Rate IDR/USD |
13,900 |
| Treasury Bills Interest Rate 3-month, percent |
5.5 |
| Crude Oil USD $ per barrel |
50 |
| Oil Lifting thousand barrels per day |
830 |
| Natural Gas Lifting barrel of oil equivalent/day |
1,155 |