2022 State Budget realization: Deficit starts to soar
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Bisnis Indonesia - Realisasi APBN 2022: Angka defisit mulai melejit
7 November 2022
By: Maria Elena
Budget deficit has reached the highest amount throughout 2022 until October, in line with the decline in tax revenue and expenditure that always soar at the end of the year.
Based on the data of the Finance Ministry, state budget (APBN) deficit per October reached Rp212 trillion or 1.15% of the gross domestic product (GDP).
That amount is still far from the target stated in the revised 2022 APBN that reaches Rp840.2 trillion or 4.54% of the GDP.
However, reflecting on the tax revenue prospect that is not as high as last year as well as the expenditure estimate that is continuously increasing, deficit will continue to widen.
Expert Staff for the Finance Minister in the Field of State Expenditure Made Arya Wijaya said that, historically, the government’s expenditure in the last three months of every year always soared.
According to him, in the last five years, policy holders spent around Rp900 trillion to Rp970 trillion. This condition increases the deficit amount compared to the GDP.
“As goods expenditure and capital expenditure are implemented based on contract, the due date falls in December,” he said last weekend.
Based on the fiscal authority record recapitulated by Bisnis, the budget deficit throughout this year is quite low as it reaches below 1% of the GDP.
This is encouraged by tax revenue that continuously increases, while expenditure is saved a little despite the government tinkering the fiscal posture to respond to the fuel price increase in September.
This is marked with the primary balance that is still in the positive territory as it reached Rp104.1 trillion per last month. However, that amount is lower compared to September that reached a surplus of Rp339.35 trillion.
The decline in the primary balance shows that state revenue can no longer support the expenditure plans that will be executed at the end of the year.
Primary balance is the comparison between state revenue and central government expenditure outside of debt interest expenditure.
This means that primary balance is the benchmark for the government’s capability to collect revenue that is used for real expenditure. “The most important thing is that primary balance is still positive,” Made stated.
Meanwhile, the government is quite optimistic about deficit in the third year of the Covid-19 pandemic being lower compared to the revised 2022 APBN target.
Economists reckon that this condition will support the achievement of the fiscal consolidation mission next year that targets deficit to be under 3% of the GDP.
Expenditure allocation
The next concern is expenditure allocation that is continuously held back by policy holders until the tenth month of this year.
Economists see that expenditure that is not boosted will increase the risk of the economy being depressed as the purchasing power of the people will be limited.
Centre of Reform on Economic (Core) Indonesia economist Yusuf Rendy Manilet said that optimal government expenditure will benefit various groups of people to face the challenges next year, especially in terms of inflation.
“This means that if the purchasing power of the people can be maintained, it will be the capital to face the economy in 2023,” he said to Bisnis on Sunday (6/11).
According to him, this is what must be considered by the government, to boost the economy by maintaining the purchasing power growth of the people.
Until now, household consumption is still the main driver of the national economy. As long as economic growth next year can reach the target, then fiscal consolidation will be realised.
“If economic growth in 2023 can be maintained, then the chance to keep the APBN deficit under 3% will be larger,” he said.
Macroeconomy and Financial Market Economist from Universitas Indonesia (UI) Faculty of Economics and Business (FEB) Institute for Economic and Social Research (LPEM) Teuku Riefky added that the challenge that is faced by the government is to realise the economic growth target to maintain the deficit. “Moreover, fiscal consolidation is already a commitment,” he said.
