JAKARTA (Bloomberg): Indonesia seeks to narrow next year’s budget deficit to below 3% of gross domestic product for the first time since 2019 as it balances the need to rein in the fiscal sector while supporting growth, President Joko Widodo said.
The fiscal gap is projected to drop to 2.85% of GDP in 2023 from an estimated shortfall equivalent to 3.92% of GDP in 2022 even as the government increases the allocation for subsidy by 4.4% to 297.2 trillion rupiah (US$20.1 billion), said Jokowi, as the president is popularly known, in his annual budget speech to parliament.
South-East Asia’s largest economy is forecast to expand 5.3% in 2023, Jokowi said. That compares with the government’s estimate of a 5.1%-5.4% gross domestic product growth for this year while inflation, which hovers near a seven-year high, is seen to ease to 3.3% in 2023 from the government’s projected range of 4%-4.8% this year.
Bulk of the subsidy budget for 2023 will be spent on energy -- fuel, LPG and electricity -- at 210.7 trillion rupiah, up slightly from from 208.9 trillion rupiah this year.
"Moving forward, we have to stay vigilant. The risks from global economic turbulence remain high,” the president said.
"The slowdown of the global economy continues to have the potential to affect the rate of short-term national economic growth.”