Indonesia Sees Rp 76t Deficit in Q1 Budget as Coronavirus Impact Begins to Hit

Jakarta. The Indonesian state budget saw a deficit of Rp 76.4 trillion, around $4.9 billion or 0.45 percent of the GDP, in the first quarter of the year, a figure the country's finance minister described on Friday as the first visible major damage from the coronavirus pandemic on the economy.
"The government's mitigation measures to contain the spread of the disease will further add pressures on tax revenues as restrictions are imposed in many aspects of life," Finance Minister Sri Mulyani Indrawati said.
Indonesia announced its first Covid-19 cases in early March and that was when the economic impact of the pandemic began to hit, Sri Mulyani said in a video conference in Jakarta.
"The implementation of the PSBB [large-scale social restriction] is limiting economic activities. The government also introduced a tax stimulus in April, meaning that the upcoming tax revenues will shoulder heavy pressures," she said.
Q1 revenues grew by 7.7 percent to Rp 375.9 trillion year-over-year, while spending stood at Rp 482.4 trillion, roughly the same as last year.
But the minister warned that the increase in revenues didn't reflect an improving economic performance overall, but was more attributable to dividend payment by state banks.
"That's because state-owned banks have held their shareholders' meetings earlier and they paid dividends in March," she said.
Cigarette manufacturers also paid their excise taxes earlier, she added.
"The figures in March don't reflect the actual economic performance. Tobacco excise tax payment and state banks' dividend payment won't happen again this year," she said.
Tax revenues were up slightly by 0.4 percent to Rp 279.9 trillion y-o-y, representing only around 15 percent of the annual target.
In March alone, tax revenues increased by 2.18 percent to Rp 88.69 trillion from the same month last year, but Sri Mulyani said the revenues were boosted by VAT collections in February.
"We are anticipating a downturn in the coming months due to the PSBB, which limits economic activities and puts a brake on businesses," she said.
But the minister stressed that Covid-19 mitigation measures will continue to become the government's priority.
"The Covid-19 outbreak is a national issue. Our priority is to contain the spread of the disease," she said.
Slower Growth
The Q1 economic growth, to be announced next month, is predicted to get as low as 4.6 percent.
"Our Q1 growth forecast is between 4.5 and 4.6 percent, but this doesn't represent the overall outlook. The second quarter will see a drastic change due to the restrictions," Sri Mulyani said.
The positive growth, albeit at a slower pace, will cushion the economy from more devastating impacts of the outbreak in coming months, she said.
The real test will come in the third quarter when the government will decide policies between two scenarios for "hard and very hard" situations, she said.
"If we see signs of recovery in Q2 and Q3, we are optimistic the economy can grow by at least 2.3 percent," she said.
Under the "very hard" situation, the economy will see a negative 0.4 percent of growth.
The original 2020 state budget projected a growth of 5.3 percent.
Related Articles
Sri Mulyani: Government Can Only Fund 40% of $625B Infrastructure Needs
“This gap will require private sector participation, strong partnerships, and innovative financing strategies,” she said.Indonesia’s State Revenue Falls 12% in Jan–Apr, Deficit Expected Ahead
Tax revenue totaled Rp 657 trillion, a decline of 8.7 percent compared to the same period in 2024.Gov't Unlocks $5.2B in Budget Funds to Accelerate Spending
Indonesia unblocks Rp 86.6T in frozen budgets to speed up spending on Prabowo’s priority programs.Sri Mulyani Warns of Major Shift in Global Trade Order Amid US Tariff Hikes
Sri Mulyani noted that Indonesia’s prompt decision to engage with the US placed it in a stronger position than other countries.Indonesian Minister Says Trump's Sweeping Tariffs Defy Economic Logic
She noted that the Trump administration’s approach appears disconnected from established economic theory.Sri Mulyani Reassures Investors on Prudent Budget Management as Stock Market Slumps
“I am not resigning and will continue my role in safeguarding state finances,” she said.Prabowo's Aide Dismisses Rumors of Sri Mulyani's Resignation
"I have checked with the government, and there is no immediate plan for a cabinet reshuffle," said Dasco.Indonesia Posts $1.9 Billion Budget Deficit Amid Falling Tax Revenue
Indonesia’s budget deficit reached Rp 31.2T as tax revenue fell 25%, but the government assures the fiscal gap remains within target.Sri Mulyani: 2026 State Budget to Follow 2025 Austerity Measures
Finance Minister Sri Mulyani Indrawati confirms Indonesia’s 2026 state budget will follow 2025 efficiency measures.2025 Budget Cuts Won’t Affect Public Services, Airlangga Assures
The government has implemented Rp 306.69 trillion in budget cuts, reallocating funds to priority programs like nutrition and healthcare.The Latest
Indonesia Introduces AI and Coding to 59,000 Schools Nationwide
Indonesia rolls out AI and coding as elective subjects in 59,000 schools, aiming to prepare students for the digital future."I Realized I Was Alive": Survivor Speaks After Air India Dreamliner Crash
A lone survivor recounts escaping the Air India crash that killed 241 people. Investigators recover the black box as probe intensifies.Dental Issues Top List in Indonesia’s Mass Health Screenings, Minister Says
Indonesia’s free health check program finds dental issues most common, ahead of hypertension, diabetes, and obesity, health minister says.AVC Nations Cup: Indonesia Defeats Hong Kong, Eyes Top-Five Finish
Indonesia’s women’s volleyball team beat Hong Kong 3-1 at the AVC Nations Cup in Hanoi to advance in the battle for fifth place.Bali, Jakarta Explore $20B Subway Collaboration to Ease Island Traffic
Bali and Jakarta officials met to discuss plans for the island’s first MRT system, with underground tracks proposed to respect local customsMost Popular
