The Indonesian President, Joko Widodo, on Friday proposed a 2,528.8 trillion rupiah ($177.56 billion) budget to parliament for 2020 which sets a target of 5.3 per cent growth in the gross domestic product (GDP).
The proposed budget is three per cent bigger than 2019’s plans, but about eight per cent larger than the latest government estimate of what Jakarta will actually spend this year.
It will fund the president’s programmes in the first year of his second five-year term, which officially begins in October.
“The 2020 state budget policy is designed to be expansive, but to remain targeted and measured,’’ Widodo told parliament.
To fund his budget, Widodo proposed to set a target of 2,221.5 trillion rupiahs of state revenue.
That brings the fiscal deficit in his budget proposals to 1.76 per cent of GDP, which he said gave room to anticipate global uncertainties.
Juniman, Chief Economist of Maybank Indonesia, said Widodo’s GDP growth assumption, which is used as the basis of the government’s tax revenue target, is unattainable.
“I’m pessimistic the 5.3 per cent growth can be achieved.
“Given the gloomy global condition and its slowdown trend this year and next, it will be hard for any emerging market to grow faster than this year,’’ said Juniman, who uses one name, like many Indonesians.
He gave a five per cent growth outlook for 2019 and 2020.
Though the president’s GDP growth target was “slightly optimistic”, the tax target was “cautiously realistic”, said Bank Danamon Economist, Wisnu Wardana.
While Widodo promised to keep building infrastructure in 2020, the budget’s main theme was improving human resources.