ASEAN KEY DESTINATIONS
Proposed 2016 Indonesia budget will lift spending by about 10 %
INDONESIA’S budget for 2016 will propose spending about 10 per cent more than this year, but the bulk of expenditures will be for fixed items such as civil service salaries and interest payments, Vice President Jusuf Kalla said on the day before yesterday.
He told a meeting proposed spending will be 2,095 trillion rupiah (US$155.8 billion).
The 2015 revised budget approved early this year called for spending 1,984 trillion rupiah, but the Finance Ministry has said about 80 trillion rupiah of that probably won’t be spent. Traditionally, the government spends less than budgeted, in part because of bureaucratic inefficiency.
Kalla said about 81 per cent of the proposed 2016 budget will be used for mandatory items including subsidies, pensions and 20 per cent allocation for education.
With the mandatory items, the government “has only 19 per cent of the budget on discretion, or about 398 trillion rupiah,” he said while giving a first glimpse of the coming year’s budget proposal, which is usually not disclosed until the president’s mid-August budget speech.
It was not immediately clear how much spending would be allotted for infrastructure. President Joko Widodo has made infrastructure projects a priority, but these has been slow to get started, also due to bureaucratic snarls.
For this year, the government budgeted 276 trillion rupiah of capital spending. The World Bank predicted only about 72 per cent of that will be spent.
This year’s budget, the first for President Joko Widodo’s administration, was criticised by analysts due to its high revenue projections. The World Bank called the budget “really unrealistic” and “overly ambitious.”
Government’s under-spending was a key reason first-quarter growth in Southeast Asia’s largest economy slumped to the weakest since 2009, at 4.7 per cent.
Kalla said the administration will improve project implementation by making the right preparation this year.
In May, Finance Minister Bambang Brodjonegoro agreed with the parliament’s budget body that the 2016 budget deficit should be kept to 1.7-2.1 per cent of gross domestic product.
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