Indonesia consumed 7.06 million kiloliters of premium gasoline during the January-June period. (Reuters Photo/Darren Whiteside)

Fiscal Room of $12b Found in Revised 2015 State Budget

BY :YASHINTO SEMBIRING

JANUARY 12, 2015

Jakarta. The administration of President Joko Widodo has submitted the revised state budget for the 2015 fiscal year to the House of Representative that gives a fiscal room of up to Rp 155 trillion ($12 billion) for increased spending on infrastructure, welfare and the maritime sector, the finance minister said on Friday.

Minister Bambang Brodjonegoro told reporters in Jakarta that in the revised state budget, the government has set a target for state revenue at Rp 1,793.6 trillion, while Rp 2,039.5 trillion has been earmarked for government spending. The state-budget deficit is projected to be Rp 245.9 trillion, or 2.21 percent of gross domestic product.

Bambang said the government would save up to Rp 230 trillion this year after it decided to remove subsidy spending on low-octane gasoline (RON88) sold by state energy company Pertamina.

However, part of this saving will have to be used to pay a Rp 25 trillion carry-over subsidy debt to Pertamina.

The government will further also have to pay electricity subsidies to state utility company Perusahaan Listrik Negara, while Rp 37 trillion will go toward subsidies for fertilizers and capital injections for some state-owned companies.

“Therefore, the fiscal room is only Rp 155 trillion,” Bambang said.

He said government infrastructure spending for 2015 fiscal year has been raised to Rp 290 trillion from Rp 139 trillion as infrastructure-related ministries, such as the Transportation Ministry and the Ministry of Public Works and Housing, will receive additional budget spending.

Bambang said the Ministry of Public Works and Housing planned to spend more on dams, water facilities, roads and housing, while the Transportation Ministry would develop railway networks outside Java and  runways that would allow smaller airports to accommodate Boeing 737-sized aircraft, and ports for better connectivity.

The government also increased special allocation funds, or funds for specific investment in the regions to Rp 55.8 trillion from Rp 20 trillion previously, mostly for irrigation development, roads and health services.

The government has a target to collect Rp 1,300 trillion from tax, up from Rp 1,200 trillion in the previous budget.

“In this way, we can increase the ratio of tax to gross domestic product to 13.5 percent from 12.3 percent previously,” the minister said.

Bambang said he expected that higher tax income would offset the falling non-taxation revenue from the oil and gas, as well as the mining sector.

Meanwhile, Indonesia’s 2015 economic growth is targeted at 5.8 percent and year-end inflation at 5 percent.

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