World Economy

Fiscal Deficit

Fiscal DeficitFiscal Deficit

Indonesia’s President Joko Widodo on Tuesday proposed to parliament a 2017 state budget that has a fiscal deficit at 2.41% of gross domestic product and assumes the economy will grow 5.3% next year, Reuters reported. The government’s GDP growth target this year is 5.2%. In the second quarter, Indonesia had stronger-than-expected annual growth of 5.18%. The initial budget for this year called for a fiscal deficit of 2.35%. But new Finance Minister Sri Mulyani Indrawati, who this month cut spending by about $10 billion, said the deficit would likely swell to 2.5%. By law, the deficit cannot exceed 3% of GDP. Indonesia’s tax collection has been below target this year, prompting those spending cuts. The government hopes to get significant revenue from a tax amnesty launched in July. Proposed total 2017 spending is 2,070.5 trillion rupiah ($158.05 billion), about 5.5% higher than what the government is expected to spend this year. The total revenue target is 1,737.6 trillion rupiah.