Govt Eyes Lower 2017 Revenues, Spending to Maintain Stability

A political observer says there was a lack of optimism in the speech President Joko 'Jokowi' Widodo delivered during a plenary session at the House of Representatives (MPR) in Jakarta on Tuesday (16/08). (Reuters Photo/Beawiharta)

By : Tabita Diela | on 4:17 PM August 16, 2016
Category : Business, Economy

Jakarta. The government has lowered its revenue and spending targets in its proposed state budget for 2017, in a move to maintain a sustainable deficit that would anchor the public's confidence in the economy ahead of worsening global economic conditions, President Joko "Jokowi" Widodo revealed in a plenary session at the House of Representatives on Tuesday (16/08).

The government hopes to generate Rp 1,737.6 trillion ($133 billion) in total state revenue next year, 2.7 percent lower than the current target of Rp 1,786.2 trillion. Revenue from taxes is targeted to reach Rp 1,495.9 trillion, 2.8 percent lower compared to the current target of Rp 1,539.2 trillion.

The proposed budget cited total spending at Rp 2,070.5 trillion, 0.6 percent lower compared to spending in the 2016 revised state budget.

Budget deficit at 2.41 percent of GDP

The above targets assume a 2017 budget deficit of 2.41 percent of the gross domestic product, larger than the 2016 target of 2.35 percent but still lower than the latest Finance Ministry estimation of 2.5 percent.

"The 2017 state budget draft is composed with an aim to strengthen fiscal resiliency and maintain fiscal sustainability in the medium term," Jokowi said in the speech.

The president pointed out that the global economy and growth in Indonesia's key trade partners such as the United States, China and Europe have yet to recover. Persistent low commodity prices may also drag down growth in Southeast Asia's largest economy, Jokowi said.

Also, according to Jokowi, uncertainties in developed countries' financial policies — such as when the US Federal Reserve will start start raising interest rates — demand that Indonesia carefully manage its deficit to shield its financial market from unexpected shock.


2017 Budget Proposal 2016 Budget Estimate 2015 Budget (realized)
Total Revenue Rp 1,737.6 trillion Rp 1,567.2 trillion Rp 1,508.0 trillion
Total Expenditure Rp 2,070.5 trillion Rp 1,961.9 trillion Rp 1,806.5 trillion
Budget surplus (deficit) (Rp 332.8 trillion) (Rp 298.5 trillion)
Budget surplus (deficit) as % of GDP (2.41)  (2.5) (2.58)

With additional reporting from Reuters




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