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Indonesian govt unveils Rp2,019.9 trillion budget plan

Indonesian government has unveiled its 2015 budget plan worth Rp2,019.9 trillion balanced with state revenues amounting to Rp1,762.3 trillion and a deficit of Rp257.6 trillion or about 2.32 percent of the gross domestic product (GDP).

“The deficit in the Draft 2015 State Budget is Rp257.6 trillion or 2.32 percent of the GDP, down from the deficit in the revised 2014 state budget set at 2.4 percent of the GDP,” President Susilo Bambang Yudhoyono announced when delivering a speech on the Draft 2015 State Budget and its Financial Notes at the plenary session of the House of Representatives (DPR) here on Friday.

In broad lines, the 2015 state budget comprises state revenues worth Rp1,762.3 trillion, which consists of tax receipts amounting to Rp1,370.8 trillion, non-tax income of Rp388.0 trillion, and a grant of Rp3.4 trillion.

The total state expenditures covered Rp1,379.9 trillion for central governments spending and Rp640 trillion to be transferred to the regional governments and villages.

The tax revenue target for 2015 at Rp1,370.8 trillion has increased 10 percent compared with the target set in the revised 2014 state budget at Rp1,246.1 trillion.

According to the president, with a total tax revenue of Rp1,370.8 trillion, the tax ratio against the GDP in 2015 stood at 12.32 percent, while the tax ratio in broad terms–which covers regional taxes and natural resources income–was about 15.62 percent.

Therefore, the head of state said that the government should implement various tax incentives in order to optimize tax receipts. The tax incentive policies included policy to increase non-tax income, government-borne taxes for the development of certain sectors, and provision of tax holiday and tax allowances to stimulate the development of strategic sectors and optimize efforts to increase economic added values.

In line with efforts to optimize tax revenues in 2015, the government also considers it necessary to make optimal efforts to increase non-tax receipts, particularly from natural resources, according to the president.

In the draft state budget, the government has set various assumptions including its target to achieve an economic growth of 5.6 percent in 2015. In setting the economic growth, the government has considered the improvement in economic fundamentals and economic stability as well as conducive external factors.

“Global economic turmoil is predicted to continue next year, but improvement in the world economy is also expected to take place. Therefore, Indonesian economic growth rate in 2015 is expected to reach 5.6 percent,” President Yudhoyono said.

In addition, the government also disclosed its assumption on the inflation rate in the state budget at 4.4 percent. He said the efforts to control inflation rate will be supported with efforts to guarantee the stability of supplies and distribution of public needs, and efforts to increase coordination among the fiscal authorities and Bank Indonesia (the central bank).

The government also assumed that the value of the rupiah currency against the US dollar will be at around Rp11,900 per US dollar.

On oil lifting, the government has set a target of about 845 thousand barrels per day, which could be achieved in stages in 2015.

Regarding the economic growth rate set at 5.6 percent, Finance Minister Chatib Basri said the target could be achieved.

“Economic growth of 5.6 percent has been due to the improvement of the situation globally,” he announced at a press conference on the principles of fiscal policy and posture of the Draft 2015 State Budget.

The minister explained that the assumptions of economic growth will be the basis for discussion of the draft budget, which will be held between the government and the parliament during the transition period.

President Yudhoyonos government will complete its term of office on October 20, 2014. The budget will be executed by the next government, namely the government of President-elect Joko Widodo, if he wins the presidential election dispute in the Constitutional Court (MK) this month.

Finance Minister Chatib Basri said that even though the growth economic target was optimistic, a potential risk still existed. “We should be aware, particularly associated with increased geopolitical risks that could raise oil prices, of the economic slowdown in China and the normalization of the policy of the United States Central Bank (The Fed),” he said.

Under these conditions, the government has set macro assumptions, such as inflation of 4.4 percent, state securities (SPN) interest rate of 6.2 percent, rupiah value of 11,900 per US dollar, price of oil ICP $105 per barrel, oil lifting about 845,000 barrels per day, and gas lifting 1,248,000 barrels per day.

Chatib Basri said that the draft budget had been formulated with a framework conservative of macro assumptions to provide space for the new government in raising growth in budget replacement. Later, a growth range of 5.5-6 percent could be adjusted by the new government.

The finance minister pointed out that the draft budget provided space for the new government to implement the program according to the vision and mission planned, so this acts as only a baseline budget for basic needs of governance and service to the community.

In the meantime, Deputy House Speaker Pramono Anung said the Draft 2015 State Budget has a special purpose. It differs from previous years draft state budget.

“The Draft 2015 State Budget (RAPBN) includes a baseline, and it will be the first of its kind after the ruling of the MK,” noted Pramono Anung at the parliament when opening a meeting of the Houses First Sitting Session for the 2014-2015 period on Friday.

He said that during the fourth sitting session in the 2013-2014 period, the House and the government together discussed the draft of the 2015 state budget through a preliminary meeting.

At the meeting, he said, the House and the government agreed to the figures on the macroeconomic assumptions of the budget, including the basic lines of fiscal policies and the government work plan as a reference in the drafting of the 2015 state budget.

Pramono added that the Draft 2015 State Budget is a transitional state budget, so the government has only drafted a baseline and has provided room for the next government to carry out various adjustments based on its vision and mission.

Source: ANTARA News