Indonesian Finance Minister Sri Mulyani Indrawati (Photo: Jakarta Post)Indonesia’s budget deficit and debt issuance closed well below targets in 2021, paving the way for an upcoming fiscal consolidation as the economy rides out the COVID-19 pandemic.
Indonesian Finance Minister Sri Mulyani Indrawati said on January 3 that the 2021 budget deficit was at 783.7 trillion rupiah (54.92 billion USD), or 4.65 percent of the gross domestic product (GDP).
Debt issuance closed at 867.4 trillion rupiah, or 86.3 percent of the 2021 target. The debt is 30 percent lower than in 2020 when issuance jumped to fund COVID-19 relief programmes.
These bring the government closer to reinstating a budget deficit cap of 3 percent of the GDP by 2023 as required by prevailing regulations.
The minister attributed the increase in State revenue to Indonesia’s economic recovery, which translated to higher income tax revenue from employees and corporations, and higher value-added tax (VAT) revenue from consumed and imported goods and services.
In 2022, the government will spend more on developing the upcoming new capital city in East Kalimantan and preparing for the 2024 general elections. It will also allocate a PEN budget for the third year in a row, but at 414 trillion rupiah, which is 44 percent smaller than last year.
The Finance Ministry plans to focus on executing the second tax amnesty, which was introduced under the Harmonized Tax Law passed last year./.