Indonesia Notes Rp153.36tn Budget Deficit in Q3

TEMPO.CO, Jakarta – The Finance Ministry's directorate general of treasury announced that the state budget deficit as of September 30, 2014 amounted to Rp153.36 trillion, a year-on-year increase from September 2013's Rp110.58 trillion.

Yudi Pramadi, the ministry's chief of communications and information services, told Antara yesterday that the deficit is 63.5 percent of the 2014 State Budget Amendment year-end target of Rp241,5 trillion.

Albeit the deficit, this year's revenues and state grants for the same period is higher than the last year's. In September last year, state revenues and grants only reached Rp982.16 trillion, while in September of this year the number reached US$1,081.31 billion, or 66.1 percent of the Rp1635.4 trillion year-end target.

Economist from Gadjah Mada University, Tony Prasetyantono, said the government must immediately crunch the budget deficit. "A safe deficit is at 2.0 percent of the DGP, but it is difficult to achieve," he said yesterday.

Tony said that reducing the budget deficit by minimizing capex absorption is not a good solution. "Looking ahead, budget deficits must not be reduced not cutting spending but [by increasing] tax revenues," said Tony.

According to Tony, not raising or even cutting the state's capex budget will stunt economic growth. "Sadly, what happens now is [the government] keeps raising the state budget yet the quality stagnates because of a low tax ratio," he said.

GANGSAR PARIKESIT | PRIHANDOKO