Infrastructure remains high on Indonesia's list of priority development. (Antara Photo/Wahyu Putro A.)

Govt Spends Less Than Targeted, as It Has Done in the Past Decade, in 2014

BY :MARGYE J WAISAPY

JANUARY 06, 2015

Jakarta. Indonesia's government spending was 6 percent short of the forecast in the state budget last year amid slow implementation of government projects for infrastructure and low global commodities prices that curbed tax revenue — repeating a pattern of underspending in the past decade.

The government spent Rp 1,764.6 trillion ($139 billion) in 2014, less than its target of Rp 1,876.9 trillion, said Finance Minister Bambang Brodjonegoro on Monday.

The government disbursed only 84 percent of the Rp 160.8 trillion earmarked for infrastructure last year, due to persistent delays in the project-bidding process, Bambang said.

Spending for fuel and electricity subsidies reached 97 percent of the Rp 246.5 trillion target, thanks to the drop in crude oil prices and the subsidized fuel price increases in November.

The government also reduced its transportation and meeting budget for officials, as it anticipated lower revenue from taxes.

The government missed its taxat revenue target by 6 percent, collecting only Rp 1,537.2 trillion instead of the projected Rp 1,635.2 trillion.

“It was due to slow economic growth, particularly in the manufacturing and mining sectors as well as the decline in the global crude palm oil price,” Bambang said.

As a result, the government ended the year with a Rp 227.4 trillion deficit, or 2.26 percent of gross domestic product. Still, that was lower than the target of Rp 241.5 trillion, or 2.4 percent of GDP.

Economists pointed out that government under-spending remains as one of the contributing factors that has been holding back the country’s economic growth. The finance minister said that Indonesia was likely to have expanded by 5.1 percent last year, which would be the slowest pace since 2009.

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