Indonesia sees 2024 budget deficit at 2.7% of GDP, finance minister says

JAKARTA (Reuters) -Indonesia’s budget deficit this year is estimated at 2.7% of gross domestic product, higher than the government’s 2.29% target, as state spending is expected to increase due to the rupiah’s depreciation, its finance minister said on Monday.

The rupiah hit 16,475 per U.S. dollar last month, its weakest in four years, due to a strong dollar and on concern about the spending plans of the incoming government. It has weakened by around 6.3% in the first half of the year.

The government’s spending on fuel subsidies has increased due to the weaker rupiah, but Finance Minister Sri Mulyani Indrawati said the government will remain vigilant in its debt management and will optimise the use of its excess cash from last year’s budget.

The government will use around 100 trillion rupiah ($6.15 billion) excess from last year to reduce debt issuance this year, she said.

“Hopefully this will help maintain macroeconomic stability, especially the exchange rate movements and government bond yields,” she told the parliamentary budget committee.

In the first six months of 2024, the government posted a fiscal deficit of 0.34%, data presented at the hearing showed.

Said Abdullah, the committee chair, warned the government about the risk of lower tax revenue this year and suggested that it put on hold projects that had a smaller impact on economic growth.

($1 = 16,265.0000 rupiah)

(Reporting by Stefanno Sulaiman; Writing by Fransiska Nangoy; Editing by Ed Davies and Sharon Singleton)


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