Indonesian govt raises budget deficit to 6.34 percent of GDP

Indonesian govt raises budget deficit to 6.34 percent of GDP

Loading activities at the Tanjung Priok Port in North Jakarta. ANTARA PHOTO/Dhemas Reviyanto/foc.

Jakarta (ANTARA) - The Indonesian Government widened the state budget deficit to 6.34 percent of the gross domestic product (GDP), or Rp1,039.2 trillion (US$73.28 billion), in the revised state budget 2020, from earlier 5.07 percent, or Rp852.9 trillion ($60.15 billion).

After a cabinet meeting with President Joko Widodo here on Wednesday, Finance Minister Sri Mulyani Indrawati drew attention to the government’s requirement for larger expenditure to handle the COVID-19 pandemic and to expedite economic recovery.

Hence, the government will revise Presidential Regulation No. 54 of 2020 on revision of the state budget 2020.

"Presidential Regulation No. 54 of 2020 will be revised, with deficit increased, from Rp852.9 trillion, or 5.07 percent of the GDP, to Rp1,039.2 trillion, or 6.34 percent of the GDP," Indrawati remarked.

The state revenue is projected to decline, from Rp1,760.9 trillion (US$124.19 billion) to Rp1,699.1 trillion (US$119.83 billion). On the other hand, state expenditure should be increased for handling the COVID-19 pandemic and for the economic recovery program.

"This is to help accommodate expenditures for economic recovery and COVID-19 handling, including for regions and sectors," the minister noted.

With the revision of fiscal instruments, the government projects economic growth to reach 2.3 percent in 2020. However, if pressures on the economy continue, domestic economic growth could contract deeper as compared to the 2020 first-quarter growth of only 2.97 percent (y-o-y).

"In connection with the growth forecast for 2020, as I said, the government will continue to use the baseline of between 2.3 percent to minus 0.4 percent. Perhaps, the second quarter will be tougher," she added. Related news: Indonesia's budget deficit reaches Rp74.5 trillion
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