A. Development in Fiscal

In Q1 2013, Indonesia posted economic growth of 6.02%, which is lower than 6.29%, registered in the same period previous year. Slower economic growth is by and large, attributable to low utilization/absorption rate of the national budget, which in quarter I, was under 10 percent. In addition, the decrease in the performance of trade balance caused by falling commodity prices also contributed to lower than expected economic growth in the first quarter. To that end, it is not surprising that such conditions culminated in the revision of macroeconomic assumptions the 2013 state budget. read more

Developments in Government Finances

The state of macroeconomic conditions at the end of 2012 was not consistent with assumptions that underpinned 2012 revised budget. Uncertainty that continue to bedevil economic conditions in the domestic economy and the global economy, have constrained growth of the economy to just 6.2%, which is below the assumption of 6.5% in the 2012 revised national budget. This is in part attributable to the trade deficit registered in 2012. In addition, budget utilization or absorption rate in 2012 was 95.6%, hence below target. read more

Developments in Government Finances

On 23 October 2012, the National Assembly appoved the State Budget (APBN) for 2013. Changes in assumptions used in drawing up the national budget for 2013 compared with those that underpinned the State Budget 2012-Revised are shown here under:

Considering the current economic conditions of the Indonesian economy and developments in the global economy, the assumptions above seem to be too optimistic. Given the high uncertainty that continues to cast a shadow above the global economy, and predictions are pointing to slower economic growth than initially projected, the assumption on Indonesian economic growth in 2013 is too high. read more