Indonesia’s Budget Deficit in Line with Full-Year Target

JAKARTA: Indonesia’s state budget for January to October 2023 registered a slight deficit of 0.7 trillion rupiah ($45.19 million), following a surplus of 67.7 trillion rupiah in the first nine months. The finance ministry remains confident that the deficit is on track to meet its full-year target, projecting it to be below 2.3 percent of GDP. This marks a reduction from the 2.35 percent deficit in 2022.

Key Financial Highlights:

Revenue and Spending Trends: Total revenues for the ten-month period reached 2,240.1 trillion rupiah ($144.62 billion), a 2.8 percent increase annually. Total spending decreased by 4.7 percent to 2,240.8 trillion rupiah.
Government’s Strategic Outlook: The government typically increases spending in the fourth quarter, following audits of subsidies and projects. This strategy, coupled with higher-than-expected revenues, supports the outlook of keeping the budget deficit below 2.3 percent of GDP for 2023.

Targeted Allocation: As of October, state revenues had already achieved 90.9 percent of the full-year target, while spending was at 73.2 percent of the total allocation for 2023.

Anticipated Spending Increase: The finance ministry anticipates a significant rise in spending towards the end of the year to cover upcoming bills and government fiscal incentives aimed at maintaining the public’s purchasing power.

Economic Growth Projections: The government expects this spending pattern, along with the onset of the election season, to contribute to achieving the country’s economic growth target of around 5 percent for the year.

Election-Related Economic Impact: With presidential and legislative elections scheduled for February 14, election-related spending is projected to contribute approximately 0.2 percentage points to GDP growth in 2023, increasing to about 0.25 percentage points in 2024.
The fiscal policy decisions and projections indicate a strategic approach to balancing economic growth objectives with prudent fiscal management, even as Indonesia navigates the complexities of its election season and global economic uncertainties​​​​​