JAKARTA. President Joko "Jokowi" Widodo has instructed his Cabinet to cut the 2017 state budget in order to facilitate a smooth transition to further cuts in the 2018 budget.
The government targets economic growth at 5.6% in 2018 and plans to allocate Rp 2.2 quadrillion (US$165.03 billion) in spending to help achieve that.
Jokowi says he wants the state budget reduced this year to make a benchmark for the 2018 state budget. Expenditure is set at Rp 2.08 quadrillion for this year.
"We set 5.6% growth for 2018. But I want the budget cut not only later in 2018 but also in 2017 as we are only in the first quarter,” Jokowi said during a meeting on the 2018 state budget at the State Palace on Tuesday. “We want massive reductions in allocations for all ministries and institutions in 2017-2018.”
Moreover, the President decided that 2017 spending on government procurements should not exceed last year’s expenditure of Rp 257.7 trillion to ensure efficiency.
To allow better spending, the government will also change the method of calculation for regional transfers. In a change to the previous method, amounts transferred to regional administrations for their budget allocations will be flexible, depending on state income.
"If our income decreases, transfers must decline too. I want transfers to the regions to follow our income fluctuations,” Jokwo said. “They now enjoy fixed transfers while we have trouble making money.” (lnd)