JAKARTA (Reuters) – Indonesia recorded a budget deficit of 4.65% of gross domestic product for last year, sharply lower than initial estimates, as revenues surpassed their target, the finance minister said on Monday.
Revenues rose on the back of a commodity boom and growing domestic demand, Sri Mulyani Indrawati told a news conference.
The government had originally designed the 2021 budget with a 5.7% deficit estimate.
But it collected 2,003.1 trillion rupiah ($140.43 billion), above target for the first time in 13 years and representing a 21.6% growth on a yearly basis, Sri Mulyani said.
“This is a very strong recovery and rebound,” she said. “This year we still have the pandemic and we were hit by Delta and Omicron, but we managed to book a 21.6% growth.”
Total government spending for 2021 was 2,786.8 trillion rupiah, she said, citing the latest unaudited data.
For 2022, the government has a budget deficit outlook of 4.85%. By law, Indonesia’s budget deficit must be under 3% of GDP in 2023.
Handy Yunianto, Mandiri Sekuritas’s fixed income analyst, said this year’s fiscal deficit has the potential to narrow further to 4.1% as some tax hikes approved by parliament in late 2021 are to be factored into the revenue target.
Those measures include an increase in value added tax rate, a new carbon tax in April and a tax amnesty programme that will run in the first half of 2022.
Josua Pardede, Bank Permata’s economist, said that the 2022 fiscal deficit could come in at a range of 3.75%-4.25% of GDP.
However, Sri Mulyani said it would be hard to forecast 2022, arguing that she could not have predicted last year’s events such as the spread of the Delta variant and the commodity boom.
“We hope the good result of 2021 will provide us some cushion for 2022,” the minister said, noting the government had a 84.9 trillion rupiah cash reserves from last year that it can carry over and use this year.
($1 = 14,264.0000 rupiah)
(Reporting by Gayatri Suroyo; Additional reporting by Fransiska Nangoy and Bernadette Christina Munthe; Editing by Ed Davies and Sanjeev Miglani)