"I hail and am glad about the passage of the government sponsored bill by the DPR," Finance Minister Agus Martowardojo said.
Jakarta (ANTARA News) - The House of Representatives (DPR) on Friday passed the 2012 state budget bill into law.

"I hail and am glad about the passage of the government sponsored bill by the DPR," Finance Minister Agus Martowardojo said when presenting the government`s final statement at a DPR plenary meeting.

He said the agreements reached by the government and the House on various substantial issues were the best optimum results that could be achieved after accommodating various inputs, views, opinions and suggestions from the various political party factions in parliament.

"The discussions have also taken into account various obstacles, internal as well as external factors. We really want the bill to be implemented and accounted for in better ways than before," he said.

Agus said among the main things the government and the DPR had reached agreement on were the basic macro-economic assumptions namely economic growth at 6.7 percent, inflation at 5.3 percent, rupiah exchange rate at Rp8,800 against the US dollar, the rate of three-month treasury bonds (SPN) at 6.0 percent, the Indonesia Crude Price at US$90 per barrel and oil lifting at 950,000 barrels a day.

"The estimates are quite optimistic but considering the latest global economic developments we think it is not impossible that economic growth will slow down. The government, however, will make maximum efforts for the achievement of the mutually agreed assumptions," he said.

State revenues and grants meanwhile had been set at Rp1,311.4 trillion and state expenditures at Rp1,435.4 trillion leaving a deficit of Rp124 trillion or 1.53 percent of gross domestic product that would be covered with funds from domestic sources totaling Rp125.0 trillion and foreign funding totaling Rp1.9 trillion.

"By cutting the deficit the government has shown that Indonesia`s fiscal conditions are quite good and still within the fiscal consolidation limits to keep the budget healthy, controlled and manageable to create fiscal sustainability," he said.

State revenue from taxes was set at Rp1,032.6 trillion and the tax ratio at around 12.72 percent of GDP while non-tax income was projected at around Rp278 trillion and income from grants at Rp0.8 trillion.

"The 2012 tax income target is realistic in that it was set with due account of the various obstacles hindering collection of taxes," he said.

He said the government would take strategic steps to increase tax revenue among others by conducting a census on tax payers, improve regulations to deal with tax avoidance, on transfer pricing, on final taxation and tax apparatus and tax system.

The tobacco excise will be raised to 12.2 percent on average in 2012, physical inspections will be made more effective, the implementation of the National Single Window will also be improved and the automatization of customs and excise services will also be upgraded.

Central government expenditures had been set at Rp965 trillion, financial transfers to the regions at Rp470.4 trillion and ministerial institutions` spending at Rp508.4 trillion and energy subsidies at Rp168.6 trillion.

"With regard to subsidies, the government has recognized the need to rationalize them gradually, especially those for fuel oils and electricity, and use the resulting savings to finance direct subsidies to the poor," he said.

The government and the DPR had also agreed to create a fiscal risk reserve of Rp15.8 trillion, especially for lifting and other basic macro-economic assumptions, including reserve funds for stabilization of food prices in case of food production shortfalls.(*)

Editor: Heru Purwanto
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