Budget deficit to widen to 2.6 percent of GDP

JAKARTA. A deficit in the 2017 state budget is expected to widen to 2.6 percent from the targeted 2.41 percent of the gross domestic product (GDP) due to extra priority spending, Finance Minister Sri Mulyani Indrawati said.

"We are likely to raise the deficit to 2.6 percent or it will slightly be higher than that," she stated in a discussion with journalists here on Monday.

The widening budget deficit will be incorporated to the revision of the draft 2017 state budget after the Finance Ministry has calculated potential extra spending and energy subsidy burden, she noted.

She further added that the widening budget deficit has also taken into account a potential shortfall in tax receipts by up to Rp50 trillion and an extra expenditure of Rp10 trillion.

"We have detected a Rp50 trillion potential shortfall in tax receipts. On state spending side, we will see a rise of up to Rp10 trillion," she remarked.

With the widening budget deficit, there will be extra spending to offset the fiscal deficit of up to Rp37 trillion-Rp40 trillion, she revealed.

"The deficit will increase from Rp330 trillion to Rp370 trillion. The extra spending will be Rp37 trillion-Rp40 trillion," she asserted.

She further said that several macro assumptions in the revision of the draft 2017 state budget will change, including economic growth, the rupiah's exchange rate against the dollar, and Indonesian Crude Price (ICP).

"Several macro assumptions will change. The (economic) growth will slightly be better compared to (the previous) 5.1 percent. The oil price will weaken again, and we will decide it in a week," she pointed out.