FINANCIAL MINISTER CONVINCES STATE BUDGET DEFICIT WILL BE UNDER CONTROL

Bogor, 25 Muharram 1437/8 November 2015 (MINA) – Finance Minister Bambang Brodjonegoro said he was confident the budget deficit by the end of the year will remain subdued, with the maximum estimate of the budget deficit stand at 2.5 percent of Gross Domestic Product (GDP).

The minister’s conviction came as the country’s deficit had been approaching a legally mandated cap and is likely to exceed the projected Rp 300 trillion in 2015, pushing the deficit to 2.7 percent of the GDP.

Under a 2003 law, drafted to prevent the conditions that led to the 1997-98 financial meltdown, the deficit may not exceed 3 percent of GDP.

Deficit risks arising from local budgets as well, he said, will not burden the overall deficit, considering that for the
past few years, expenditure of local governments was not optimally absorbed.

The local governments had until now just used their budget by 54 percent.

“We believe the deficit would be under control. We try deficit at the end of the year would be at around 2.5 percent, no more,” he said.

According to Bambang, the estimate would also include the calculation of a tax revenue shortfall in which it would be kept not exceed the target of Rp160 trillion from Rp1.924 trillion.

Until early November, said Bambang, tax revenues amounted to Rp766 trillion.

At least, in the last two months, said Bambang, the government still seeks to boost tax revenue through routine taxes, and the “extra effort” that is targeted to collect a minimum of Rp50 triiun.

Besides, the government is also preparing a multilateral loan to cover the deficit at the end of the year.

Earlier, Coordinating Minister for the Economy Darmin Nasution, said the issue of the rising deficit would be discussed at a cabinet meeting. (T/R07/R01)

Mi’raj Islamic News Agency (MINA)