JPM Asia ex-Japan Economic Research

Indonesia: deficit revised down on lower expenditures
2010/07/27 21:05:57 -0400

Indonesia recently announced its 1H10 fiscal position and also updated the 2010 budget program. In the revisions, the headline fiscal deficit has been revised lower to 1.5% of GDP (IDR95.1 trillion) from 2.1% (133.7 trillion). This decline reflects the shortfall in spending, which is now forecast to reach 17.2% of GDP from 18% of GDP and a small decline in expected revenues to 15.7% of GDP from 15.9%.

The shortfall in expenditures is pretty much par for the course in Indonesia which mainly reflects lower than expected disbursements at the ministerial level. Subsidy costs are expected to be 3.1% of GDP from 3.2% originally.

In response to the lower financing requirement, the fiscal authorities have trimmed the financing requirements for 2010, with the total financing need now expected to be IDR235.5 trillion, down from 275 tril. Of the IDR39.7 trillion reduction in financing needs, IDR22 trillion comes mainly from a reduction in the use of the 2009 cash surplus while the other IDR17.8 trillion stems from a reduction in debt issuance. Of that, IDR2.3 trillion is from a reduction in program loans while the other IDR15.5 trillion reduction is from lower debt issuance.