New Macroeconomic Assumptions in Indonesia's Revised State Budget
After a long plenary session on Monday (17/06), Indonesia's House of Representatives (DPR) and the government have agreed to the revised 2013 State Budget (APBN-P). The revision was needed as original macroeconomic assumptions began to fall out of tune with reality. Due to global and domestic conditions a number of assumptions needed to revised down. Most controversial decision that was taken is the increase in price of subsidized fuel by 44 percent to IDR 6,500 (USD $0.66) per liter.
The table below shows the original and revised State Budget of 2013:
| State Budget 2013 |
State Budget Revised |
|
| Economic Growth annual percent change |
6.8 | 6.3 |
| Inflation annual percent change |
4.9 | 7.2 |
| Exchange Rate IDR/USD |
9,300 | 9,600 |
| Interest Rate Treasury Bills percentage |
5.0 | 5.0 |
| Indonesian Crude Oil Price USD$/barrel |
100 | 108 |
| Oil Lifting thousand barrels/day |
900 | 840 |
| Natural Gas Lifting barrel of oil equivalent/day |
1.360 | 1.240 |
| Budget Deficit percentage to GDP |
-1.65 | -2.38 |
A comparison between the original and revised State Budget shows that economic performance has not been as strong as expected when composing the original State Budget. Economic growth has been revised down due to slowing investments, weak exports and non-optimal government spending. Inflation is most likely to jump a couple of percentage points as the House of Representatives (DPR) and government have agreed to a significant hike in the price of subsidized fuel. The IDR rupiah has been one of the worst performing Asian currencies against the US dollar in 2013 due to a series of trade deficits and higher inflation, thus resulting in the new assumption of IDR 9,600. Lack of successful exploration and investment in Indonesia's oil and gas sector have led to a lower forecast of oil and gas output. Lastly, the budget deficit as a percentage of GDP shows a sharp downward revision to -2.38 percent of GDP.