Indonesia’s budget tips into deficit in October, on track for full year target

JAKARTA (Reuters) – Indonesia’s state budget tipped into 0.7 trillion rupiah ($45.19 million) deficit for the January-October period, having shown 67.7 trillion rupiah surplus in the first nine months, and was on course to meet its full year deficit target, the finance minister said on Friday.

While the budget deficit for the first 10 months was equivalent to just 0.003% of gross domestic product, the government expects the 2023 deficit to be below 2.3% of GDP, reducing it from 2.35% in 2022.

Total revenues for the 10 months were 2,240.1 trillion rupiah ($144.62 billion), up 2.8% on annual basis, while total spending was 2,240.8 trillion rupiah, down 4.7%, Sri Mulyani Indrawati told a press conference.

“So far our state-budget performance is still on track, if there’s deviation it will be a positive one. This is a momentum that we will continue to maintain,” she said.

The government typically spends a lot more in the fourth quarter because authorities wait until auditors check bills for subsidies and projects.

The ministry’s maintained its outlook that the budget deficit for 2023 would be below 2.3% of GDP due to higher-than-expected revenues.

State revenues for the 10 months were already at 90.9% of the full-year target, while spending in the same period was 73.2% of the total allocation in 2023, the minister’s presentation showed.

Sri Mulyani said in October that spending would rise significantly in the rest of the year to pay upcoming bills, including the government’s fiscal incentives to maintain people’s purchasing power.

Government spending for rest of the year and the start of election season will help the country’s to reach its economic growth this year at around 5%, the ministry has said.

Indonesia will hold presidential and legislative elections on Feb.14. The campaign season starts next week.

Election-related spending was seen contributing about 0.2 percentage point to the GDP growth in 2023 and increasing to about 0.25 percentage point in 2024, Febrio Kacaribu, the head of fiscal policy agency at the finance ministry, told the news conference.

($1 = 15,490.0000 rupiah)

(Reporting by Stefanno Sulaiman and Stanley Widianto; Editing by Martin Petty, Kanupriya Kapoor and Simon Cameron-Moore)