Indonesia to slash state spending by US$21 billion
JAKARTA - The government plans to cut state expenditure by 290 trillion rupiah (US$ 21.6 billion) in the 2016 revised state budget to avoid widening the budget deficit amid a plunge in global oil prices.
The Vice President's chief economic adviser, Sofjan Wanandi, said state expenditure would be slashed to Rp 1.8 quadrillion in the 2016 state budget revision. Spending on non-productive sectors, including inefficiencies in ministries and institutions, would be prioritized to be cut.
"The allocation of infrastructure expenditure must not be cut, but other spending should be cut by 5 to 10 percent of the total [allocation]. Rp 290 trillion is the minimum cut," Sofjan said in Jakarta on Monday.
The allocation of infrastructure spending, he continued, should remain intact, as it was needed to spur economic growth. The government has targeted 5.3 percent growth this year, higher than last year’s growth of 4.7 percent.
In the initial 2016 state budget, totaling Rp 2.1 quadrillion, the government and the House of Representatives allocated Rp 1.3 quadrillion to government spending, and Rp 770.2 trillion for regional transfer funds and village funds.
With state revenue at Rp 1.8 quadrillion, the budget deficit has been set at Rp 273.2 trillion, or 2.15 percent of gross domestic product (GDP). Last year, the budget deficit stood at 2.56 percent of GDP.
As of Feb. 5, according to Finance Minister Bambang Brodjonegoro, the budget deficit was 0.55 percent or Rp 70 trillion, as state revenue reached Rp 94.4 trillion while spending stood at Rp 164.9 trillion.
To fill the gap, Bambang said, the government would boost state revenues from taxes through a tax amnesty. Currently, the tax amnesty bill is listed in the National Legislation Program (Prolegnas) at the House of Representatives.
