The House of Representatives’s budget committee and the government have agreed on a cap on the state budget for next year, anticipating a slow global economy to drag down the country’s growth.
The committee agreed on Rp 2,081 trillion ($160 billion) in total spending for next year — which includes central government spending, transfer funds and village funds, 0.1 percent lower compared to Rp 2,083 trillion in the revised 2016 state budget.
Revenue from taxes, non-tax sources and grants was earmarked at Rp 1,750 trillion, 2 percent lower from this year’s Rp 1,786 trillion. But, Finance Minister Sri Mulyani Indrawati has said the 2017 target is about 13 percent more than what the government thinks it can collect this year, including the extra revenue from the tax amnesty program.
That puts the 2017 state budget deficit at Rp 330.2 trillion, or 2.41 percent of the country’s gross domestic product, lower than an estimated deficit of 2.7 percent of GDP this year.
While the budget is not final, it is unlikely lawmakers would reject it when they sit for a plenary meeting next month.
The 2017 state budget assumes a 5.1 percent economic growth, lower compared to the 5.3 percent initial target mentioned by President Joko Widodo in his Independence Day speech on Aug. 16.
The budget committee and the government also agreed on other assumptions, including 4 percent inflation, 5.3 percent yield average three-month government bonds and rupiah to be traded at 13,300 on average against the US dollar next year — unchanged from the initial estimation.