Zainal Riadi, S.Pd., MSas
Finance minister aims for 5.9% growth in 2017 budget
The government has projected an optimistic economy in the 2017 state budget draft, with a 5.5 percent to 5.9 percent economic growth target. However, a conservative stance is taken for the state revenues projection.
In the government’s 2017 macro-economic assumptions, the inflation target is set in the range of 3 percent to 5 percent and the exchange rate is targeted at between Rp 13,650 to Rp 13,900 per US dollar, oil prices at $35 to $45 per barrel, oil lifting at 740,000 to 760,000 barrels per day and gas lifting at 1 million to 1.1 million barrels per day.
“Meanwhile, revenue will be conservative, with tax revenue rising less than an estimated Rp 30 trillion in 2017 from the revised 2016 state budget,” Finance Minister Bambang Brodjonegoro said at the State Palace on Thursday.
In the draft 2017 budget, the government predicts that state revenues will continue to be affected by low global oil prices, and thus aims for ministry and institution spending to be well-targeted and focused on priorities.
“Ministry and institution expenditure is expected to be lower than the government’s transfer to the regions and village funds,” Bambang said, adding that prioritized ministries and institutions were those related to infrastructure, defense and security, education and health.
The government will review the allocation to fertilizer subsidies ahead of a possible cut. “So we’re not just talking numbers, but also talking about goals,” Bambang asserted.
As stipulated in a 2003 law, the minister went on, the government is obliged to provide materials for “the 2017 macro-economic policies and fiscal policy principles” and “the 2017 government work plan [RKP]”.
“Of course, we cannot discuss the figures in any more detail, as it will be submitted [to the House of Representatives] in August,” Bambang explained.
He added that the 2017 state budget aimed to be rigorously consistent with the approach of allocating funds according to individual programs.
The President previously ordained greater transfer of funds to regions and villages, exceeding the budget allocation for ministries and institutions. Special allocation funds ( DAK ) should, according to the President, be used to encourage local economic growth.
From the revenue side, Jokowi acknowledged that tax revenue was to remain the main source of state revenue in 2017, noting that the tax ratio needed to be optimized and the tax base expanded. ( ags )