Jakarta. The Ministry of Finance is confident that total government spending will reach 97.1 percent of the target set in the revised state budget, thanks to better planning and increased efforts to promote infrastructure projects.
Southeast Asia's largest economy has been traditionally missing its spending target, partly due to the slow development of government-initiated projects and a complex bureaucracy to legitimize spending. Last year's actual spending figure stood at 90.5 percent of the target.
Finance Minister Sri Mulyani Indrawati said ministries and government agencies are better in their planning this year.
"The president himself ordered the acceleration of infrastructure-related spending," Sri said in a statement last week.
According to the latest publicly available data, total government spending — including spending across ministries, government agencies, village funds and funds transferred to regional governments — stood at Rp 1,006.9 trillion ($76.6 billion), or 48.3 percent of the target set in the revised budget, as of July 29.
Total government revenue — including revenue from taxation and grants — stood at Rp 759.1 trillion, or 42.5 percent of the target.
Finance Ministry officials estimate revenue from tax and excise will be Rp 219 trillion less than its Rp 1,539.2 trillion target.
As the government seeks to accelerate spending, the state budget deficit might soar to 2.7 percent of the estimated gross domestic product, which will exceed the previous estimate of between 2.5 and 2.35 percent, as projected in the 2016 revised state budget.
According to Loto Srinaita Ginting, the director for government debt securities at the Finance Ministry's directorate general of budget financing and risk management, the government seeks an additional Rp 27 trillion in proceeds from gross bond issuances to help plug the widening budget deficit.
Additional reporting by Reuters.