Indonesia Posts Narrowest Budget Deficit in 6 Years in 2018: Finance Minister
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Indonesia posted the smallest fiscal deficit in six years in 2018 and less than initially projected, despite turbulence in its financial markets due to capital outflows, Finance Minister Sri Mulyani Indrawati said in a Facebook post. The estimated budget deficit last year was equal to 1.72 percent of gross domestic product, narrower than both the government’s original plan of 2.19 percent and the latest estimate of 1.83 percent, Sri Mulyani said in a message posted late on New Year’s Eve.
As a percentage of GDP, that was the smallest since 2012, the former World Bank managing director said.
The 2018 budget also has a Rp 4.1 trillion ($283 million) surplus in its primary balance, or budget balance before interest payments, which Indrawati said was the first surplus since 2011.
“We have done our duty to manage government finances well. The year 2018 was not an easy year with fluctuations in the global economy, commodity prices, capital flows and exchange rate,” she said, while also noting higher interest rates at home and globally.
The rupiah plunged to its weakest in 20 years in 2018 due to capital outflows linked to worries about its twin deficits, US interest rate increases and concerns about the fallout for Asia from the US-China trade war.
However, inflows towards the end of the year bounced it back and the currency closed the year 6 percent weaker compared with end-2017.
Sri Mulyani said 2018 income from taxes and other revenue sources grew “high and healthy.” She previously said higher oil prices and a weaker rupiah had resulted in higher government revenues.
The minister is expected to hold a news conference on budget realization on Wednesday.
Questions & Answers
Q.What was the estimated budget deficit for Indonesia in 2018?
What was the estimated budget deficit for Indonesia in 2018?
The estimated budget deficit for Indonesia in 2018 was 1.72 percent of gross domestic product. This was narrower than both the initial plan of 2.19 percent and the latest estimate of 1.83 percent.
Q.How did the 2018 deficit compare to previous years?
How did the 2018 deficit compare to previous years?
The 2018 deficit, at 1.72 percent of GDP, was the smallest Indonesia had posted in six years. It was also the narrowest percentage since 2012.
Q.Did Indonesia's budget have a primary balance surplus in 2018?
Did Indonesia's budget have a primary balance surplus in 2018?
Yes, Indonesia's 2018 budget had a Rp 4.1 trillion ($283 million) surplus in its primary balance. This was the first surplus in the primary balance since 2011.
Q.What factors led to the rupiah's fluctuation in 2018?
What factors led to the rupiah's fluctuation in 2018?
The rupiah plunged due to capital outflows linked to twin deficit worries, US interest rate increases, and US-China trade war concerns. However, inflows towards year-end helped it recover, though it closed 6 percent weaker than end-2017.