"We will need to watch out for the deficit."
Jakarta (ANTARA News) - The 1.62 percent deficit that has been proposed in the draft of the 2013 state budget is the most favorable figure that the government can recommend to the House of Representatives (DPR), a deputy minister said on Friday.

"I think the deficit figure of 1.62 percent is an optimal one, given the current uncertain global economic conditions. The number can be changed during deliberations with the DPR, but what the government has suggested seems to be the best figure," Lukita Dinarsyah, the deputy minister for National Development Planning said.

He added that the 1.62 percent figure hasn`t been finalized yet as the government still needs to discuss it with the DPR, after which it will be included in the final state budget for 2013.

"We will need to watch out for the deficit. I think 1.62 percent is a prudent figure, which can provide the stimulus for accelerating economic growth," Dinarsyah stated.

The deputy minister pointed out that global economic conditions continue to remain weak, with a number of major countries still grappling with current transaction deficit, swelling inflation and the depreciation of their currencies against the U.S. dollar.

Earlier, Finance Minister Agus Martowardojo had said that the government will focus on controlling the budget deficit in 2013, which has been pegged at Rp150.2 trillion, or 1.62 percent of the Gross Domestic Product (GDP).

"What we want to safeguard is our fiscal condition. If a deficit is created, it must be kept under control," the finance minister said on Thursday.

He also noted that world economies are currently slowing down, as several countries tackle current account deficits, rising inflation and currency depreciation against the U.S. dollar.

Given these circumstances, Indonesia must stay alert as this situation is likely to indirectly affect the country's budget deficit and reduce investment, which is expected to be one of the main drivers of growth in 2013, Martowardojo said.

"We must contemplate structural reform seriously so that investors feel comfortable investing in our country," he stated.

The minister explained that by structural reform he means improving infrastructure, accelerating implementation of land clearing policies and harmonizing local and central government regulations.

"Those measures need to be adopted," Martowardojo asserted.

The government should also control the budget deficit and maintain the debt ratio to Gross National Product at a manageable level to maintain fiscal sustainability and health, he added.

The best possible way to achieve these targets will be by developing sources of state revenue, while maintaining a good business climate, discipline in expenditures and implementing a prudent borrowing policy, the finance minister suggested.
(Uu.A014/INE/KR-BSR/B003)

Editor: Priyambodo RH
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