The government has decided to revise the 2016 state budget, according to the result of a plenary cabinet session held on Wednesday.
“The finance minister has proposed the revision of the 2016 state budget although it still has five months to go,” Cabinet Secretary Pramono Anung said after the plenary cabinet session led by President Joko Widodo (Jokowi) and Vice President Jusuf Kalla.
In principle, both the president and the vice president have agreed to the proposal for the revision of the 2016 state budget and that it binds all ministries and government institutions, Pramono said.
The president has proposed a revision of the 2016 state budget to the House of Representatives (DPR) which later endorsed it into revised 2016 state budget in June 2016.
Finance Minister Sri Mulyani Indrawati said the cabinet session on Wednesday discussed the final notes of finance and postures of the 2017 state budget.
“But to draw up a credible and solid state budget, we must look at the condition in 2016. The president has decided that the state budget will continue to serve as an instrument to maintain the momentum of economic activities so more job opportunities can be created as part of efforts to lower poverty rate,” she said.
She noted that tax receipts in the past couple of years have come under heavy pressure due to a shortfall in the prices of oil, gas, coal, palm oil and so on, leading to a decline in tax receipts.
“The trade and construction sectors in 2016 also come under pressure as reflected by the volume which grew only a half of the previous years growth,” she said.
In addition, the sluggish global trade has caused the Indonesian economy to contract since 2015, she said.
“Under these circumstances, the Finance Ministry has reported that a potential decline in tax receipts this year is quite large because the 2016 calculation base is still high,” he said.
She said the tax receipts in 2015 were nearly Rp249 trillion lower than the target.