| JAKARTA, June 14
JAKARTA, June 14 Indonesia's fiscal deficit
target has been narrowed to 2.4 percent of gross domestic
product (GDP) in a revision of the 2014 budget approved by a
committee late on Friday, the finance minister said, from 2.51
percent proposed earlier.
The deficit figure is 42 percent higher than the 1.69
percent fiscal deficit targeted in the original 2014 budget for
Southeast Asia's largest economy.
The adjustments are needed to account for changes to
Indonesia's macroeconomic assumptions - specifically a slower
growth forecast, lower crude oil output and weaker rupiah
exchange rate that has faced pressure from a yawning trade
deficit and current account.
The deficit has declined to 241.49 trillion rupiah ($20.48
billion) from a 251.72 trillion rupiah forecast, Finance
Minister Chatib Basri said.
The latest figure is 38 percent higher than the deficit of
175.4 trillion rupiah set in the original 2014 budget.
"The decline primarily stems from a reduction of the total
government bonds to 264 trillion (rupiah) from 274 trillion
(rupiah)," Basri told parliament referring to government
obligations in a draft revision.
"As a result the spending cuts by other ministries targeted
at 100 trillion in the revised state budget have now been
reduced to 43.025 trillion (rupiah) or a reduction in ministry
spending of 56.97 trillion (rupiah)."
By law, the deficit must not exceed 3 percent. Parliament is
expected to sign off on the revised budget soon.
Earlier, President Susilo Bambang Yudhoyono had decided to
cut the budget by 100 trillion rupiah, Basri said.
Indonesia's fuel subsidy spending has increased 17 percent
to 246.49 trillion rupiah in the revised budget from 210.74
trillion rupiah in the original, Basri said.
The total electricity subsidy spending in the revised budget
has increased 45 percent to 103.82 trillion rupiah from 71.36
trillion rupiah, he added.
"This increase is a result of a change in the exchange rate
that has been pegged at 11,600 (per U.S. dollar) and a decline
in (targeted) crude oil production from 870,000 barrels per day
(bpd) to 818,000 bpd," Basri said.
The latest economic assumptions included in the revised 2014
budget forecast growth this year at 5.5 percent, budget
committee chairman Ahmadi Supit told parliament, down from 6
percent in the original. Inflation is seen at 5.3 percent, below
the 5.5 percent originally forecast.
The rupiah rate assumption of 11,600 per dollar "is still
realistic," central bank governor Agus Martowardojo told
lawmakers. The original budget had pegged the rupiah at 10,500.
"What needs to be noted are the government's efforts to
control the current account deficit. If possible exports will be
protected so they improve and imports can be tightened,"
"Exports are a challenge for the government remembering that
there is still pressure on commodity prices. What's more,
mineral exports are still being hindered by the law on coal and
minerals," he said.
Crude oil prices are expected to remain at $105 per barrel,
while gas output is seen at 1.224 million barrels of oil
equivalent per day (boepd), down from 1.24 million boepd in the
($1 = 11790 rupiah)
(Writing by Fergus Jensen; Editing by Robert Birsel)