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.