Govt Sticks to 5.2% Growth Target Despite Spending Cut Plan: Planning Minister
The government stood firm on its target of a 5.2 percent economic growth target this year despite plans to cut unnecessary spending, a minister said.
“The so-called ‘self-blocking’ should not disturb efforts to accelerate economic growth in the second half,” National Development Planning Minister Bambang Brodjonegoro told reporters on Tuesday (09/08).
The former finance minister said ‘self-blocking’ refers to a concerted effort by ministries and government agencies to assess budget and cut unnecessary spending.
Bambang said the government will focus its spending on sectors that will help reduce poverty and boost job availability in a bid to propel household spending, which makes up more than half of the country’s economy.
The spending cut directive was spearheaded by Finance Minister Sri Mulyani Indrawati, who previously announced plans to cut ministry and regional spending in the 2016 state budget to regain credibility for the country’s fiscal policy and offset the expected shortfall in taxation revenue.
Sri Mulyani reportedly plans to cut Rp 65 trillion ($5 billion) from the ministries’ budget and Rp 68.8 trillion from regional spending.
“The important thing is that we don’t touch priority spending, because we’re pushing for quality economic growth through quality spending,” Bambang said.
According to Bambang, the National Development Planning Board (Bappenas) has requested the finance ministry’s budgeting director general not to cut key spending of each ministry.
Bambang said ‘self blocking’ has already forced the Public Works and Housing Ministry to target cheaper bidders in project tenders.
Arif Budimanta, the deputy chairman of the National Economics and Industry Committee or KEIN – a government agency whose roles include boosting the manufacturing sector – said in a statement on Tuesday that the government will ensure spending cuts will be carefully calculated to offset the expected shortfall in state revenue amid weak taxation collection.
Indonesia’s economy accelerated in the second quarter of this year with gross domestic products (GDP) expanding by 5.18 percent in April-June from the corresponding period last year.
That compares to a 4.91 percent year-on-year increase in the first quarter.
Gradual recovery in consumer spending and global commodity prices have helped lifted Indonesia’s growth.
According to the 2016 revised budget, the government sets a target to spend Rp 768 trillion from ministries and government agencies. This figure is 6 percent higher compared to last year’s.
Meanwhile, regional spending is budgeted at Rp 729 trillion this year, 17 percent higher compared to Rp 623 trillion last year.
source: jakartaglobe.beritasatu.com