Indonesia’s new finance minister said late on Wednesday she would significantly cut state spending this year to hold the fiscal deficit within the legal limit of 3 percent of gross domestic product.
Sri Mulyani Indrawati, a former managing director of the World Bank appointed finance minister a week ago, said she had clearance from President Joko Widodo to slash spending, including regional funds, by 133.8 trillion rupiah ($10.2 billion).
“We will look through spending (option by option)… so that it can be lowered without hurting the government’s commitment for priority spending such as those for infrastructure development, education, teachers’ allowance and healthcare spending,” she said.
The move was needed to ensure the deficit kept within the 3 percent limit, Indrawati said, forecasting a 219 trillion rupiah shortfall in revenue collection.
The 2016 budget was passed last year with a revenue target many analysts considered optimistic. Indrawati’s predecessor, Bambang Brodjonegoro, then made modest cuts to spending in June, also viewed as insufficient.
“Things must be straightened starting with a state budget that reflects our current economic reality,” Indrawati told reporters at the state palace.
The new cuts would increase the fiscal deficit to 2.5 percent of GDP, she said, adding there would be no change to the government’s target of 5.2 percent economic growth.
The current budget assumes an average rupiah exchange rate of 13,500 per dollar this year, while Indrawati said 13,300 was more likely.
Askolani, the finance ministry’s director general for budgeting, said the government would implement the budget changes directly without having to go through parliament.
Sumber : BusinessInsider
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