Minister: 2023 Records Smallest Fiscal Deficit in 12-years

Citing a recent Reuters report, Channel News Asia say that Indonesia has reduced its 2023 budget deficit significantly to IDR 347.6-trillion (approx. USD 22.48-billion), equivalent to 1.65-percent of gross domestic product (GDP) based on unaudited figures, which was the slimmest since 2011 and significantly smaller than the government’s original 2023 fiscal deficit plan of IDR 598.2-trillion, said Finance Minister Sri Mulyani Indrawati on Tuesday (2/1/24.)

Indonesia’s fiscal deficit in 2022 stood at 2.35-percent of GDP and the government plans to spend USD 216-billion this year, with a fiscal deficit outlook of 2.29-percent of GDP.

Total spending last year reached IDR 3,121.9-trillion (approx. USD 201.87-billion), 0.8-percent up from 2022. Total revenues stood at IDR 2,774.3-trillion, above target and representing a 5.3-percent gain from the previous year, according to Channel News Asia.

“The positive performance of the 2023 budget will be a good foundation for 2024, to guard the economy in 2024 against political cycle and geopolitics,” Sri Mulyani said, referring to Indonesia’s general elections due in February and rising geopolitical tensions in other countries.

Channel News Asia says that Indonesia has been trying to cut its fiscal deficit to navigate rising borrowing costs globally and better manage its debt after large expenditures during the COVID-19 pandemic.

The small deficit in 2023 came even as economic activity in Indonesia slowed, with its exports shrinking amid falling commodity prices and weakening global trade.

Indonesia’s growth is likely to decelerate to around 5-percent in 2023 from 5.3-percent in the year before, Sri Mulyani said, predicting growth of 5.2-percent in 2024.

Channel News Asia reported that 2023 was also the first year since 2012 that the government booked a primary surplus, Sri Mulyani said, referring to the fiscal balance excluding net interest payments on public debt.

For 2024, the government plans to use IDR 51.38-trillion of its accumulated cash to cover the budget deficit and reduce debt issuance, said Suminto Sastrosuwito, the ministry’s head of budget financing, adding that the figure would be evaluated based on needs.

 

Source: Channel News Asia

Stock image by Mohamad Trilaksono from Pixabay

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