Indonesia Plans to Narrow 2024 Fiscal Deficit, Sees Higher GDP Growth

STATE BUDGET - JAKARTA. Indonesia expects to bring its budget to a narrower fiscal deficit next year, even as its economic growth is predicted to accelerate, senior officials said on Monday, as President Joko Widodo aims to finish its remaining infrastructure projects.

Indonesia recorded a 464.3 trillion rupiah ($30.64 billion) fiscal deficit in 2022, or 2.38% of gross domestic product, based on unaudited data, the government said last month.

It expects a fiscal deficit of 2.84% of GDP in 2023 and, according to Finance Minister Sri Mulyani Indrawati, a 2024 state budget deficit in a range of 2.16% to 2.64% of GDP.

Addressing plans for the state budget spending for next year, Sri Mulyani said challenges for 2024 economic growth include maintaining confidence of consumers and keeping investment momentum strong, as well as anticipating export disruption over geopolitical issues.

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"Next year, the budget will be maintained. On the one hand state revenues will grow with an ever-increasing tax ratio and budget spending will be maintained with discipline and in accordance to national agendas," she said.

Separately, Indonesia's economy in 2024 is projected to expand between 5.3% and 5.7%, Susiwijono Moegiarso, secretary of the coordinating ministry of economy, told Reuters on Monday.

Sources of that growth would be investments and household consumption, he said, which accounts for more than half of Indonesia's GDP.

Other sources included energy transition, construction of the new capital and downstreaming policies on natural resources, he added.

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Southeast Asia's largest economy expanded 5.31% in 2022, official data showed earlier this month, its best annual growth rate since 2013.

Household consumption accelerated last year, supported by travel-related spending from the easing of pandemic restrictions.

The government has set a target of 5.3% for economic growth in 2023. It also gave an early projection for headline inflation in 2024 in the range of 1.5% to 3.5%, Susiwijono added. ($1 = 15,155.0000 rupiah) 

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