JAKARTA (Reuters) – Indonesia recorded a budget deficit of 4.65% of gross domestic product last year, significantly below initial estimates as revenues exceeded their target, the finance minister said on Monday.
Revenues have risen on the back of the commodity boom and growing domestic demand, Sri Mulyani Indrawati told a news conference.
The government originally designed the 2021 budget with an estimated deficit of 5.7%.
But it raised 2,003.1 trillion rupees ($140.43 billion), above the target for the first time in 13 years and representing growth of 21.6% on an annual basis, said Sri Mulyani.
“This is a very strong recovery and rebound,” she said. “This year we still have the pandemic and we were hit by Delta and Omicron, but we managed to see 21.6% growth.”
Total government expenditure for 2021 was 2,786.8 trillion rupees, she said, citing the latest unaudited data.
For 2022, the government forecasts a budget deficit of 4.85%. By law, Indonesia’s budget deficit must be less than 3% of GDP in 2023.
Handy Yunianto, fixed income analyst at Mandiri Sekuritas, said this year’s budget deficit could narrow further to 4.1% as some tax hikes approved by parliament at the end of 2021 need to be taken into account in revenue target.
These measures include an increase in the value added tax rate, a new carbon tax in April and a tax amnesty program that will run in the first half of 2022.
Bank Permata economist Josua Pardede said the 2022 budget deficit could be in the range of 3.75% to 4.25% of GDP.
However, Sri Mulyani said it would be difficult to predict 2022, arguing that she could not have predicted the events of the past year such as the spread of the Delta variant and the commodity boom.
“We hope that the good result of 2021 will provide us with a cushion for 2022,” the minister said, noting that the government has 84.9 trillion rupees in cash reserves from last year that it can carry over and use this. year.
($1 = 14,264.0000 rupees)
(Reporting by Gayatri Suroyo; Additional reporting by Fransiska Nangoy and Bernadette Christina Munthe; Editing by Ed Davies and Sanjeev Miglani)
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