Indonesia’s parliament approves 2023 fiscal budget

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FILE PHOTO: Indonesian president likely to weather fuel price rise uproar, analysts say

JAKARTA (Reuters) – Indonesia’s parliament on Thursday approved President Joko Widodo’s 3,061.2 trillion rupiah ($200.73 billion) budget for next year, with a fiscal deficit of 2.84% of gross domestic product, the deputy house speaker Rachmat Gobel said.

The 2023 budget aims to consolidate fiscal positions after the deficit was allowed to stretch beyond a legally-mandated 3% ceiling in the last three years for emergency response to the pandemic.

Indonesia’s economic growth and inflation targets for next year were set at 5.3% and 3.6%, respectively. Total revenues were approved at 2,463 trillion rupiah, slightly higher than proposed by the president last month at 2,443.6 trillion rupiah.

Southeast Asia’s largest economy has been recording a trade surplus every month since May 2020, on the back of strong commodity exports and the government expects to end this year with growth of about 5%.

Bank Danamon economist Irman Faiz said that spending and revenue targets were “realistic”, but inflation could be higher than 4% due to ongoing disruptions in global supply chains.

Details of the approved 2023 budget:

Budget assumptions 2023 budget 2022 budget

outlook

Economic growth (%) 5.3 5.1-5.4

Inflation (%) 3.6 4.0-4.8

10-year bond yields (%) 7.9 6.85-8.42

Rupiah exchange rate/$ 14,800 14,500-14,900

Indonesia crude $90 $95-$105

price/barrel

Oil lifting (bpd) 660,000 625,000-630,000

Gas lifting (boepd) 1.100mln 956,000-964,000

(in trillion rupiah) 2023 budget 2022 budget

Revenues 2,463 2,266.2

– Tax revenues 2,021.2 1,784

– Non-tax revenues 441.4 481.6

Expenditure 3,061.2 3,106.4

– Energy subsidies 211.98 208.9

Surplus/deficit -598.2 -840.2

– as of GDP -2.84 -4.5

Deficit financing 598.2 840.2

Debt issuance 696.3 943.7

($1 = 15,250.0000 rupiah)

(Reporting by Stefanno Sulaiman; Editing by Kanupriya Kapoor, Ed Davies)

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