The posture of RAPBN-P 2013 state budget was rated as being lack of
fiscal stimuli considering that some productive sectors like industry and
agriculture did not get any reasonable incentive or subsidy. RAPBN-P which was
designed to be at deficit of 2.48% was ironically used to finance subsidy which
swelled fro Rp317.2 trillion to Rp358.2 trillion.
Thirty percent of the subsidy fund was taken from the Central government’s
budget. Surprisingly capital expenditure as fiscal stimulus dropped from 16% to
15.7%. And yet amidst downturning export and pressures and deficit of trade
balance productive fiscal stimulus was needed for strengthening of domestic
economic capacity especially in the productive sectors which accommodated
labor.
In RAPBN-P 2013 the government allocated fund for energy subsidy
amounting to Rp309.9 trillion, consisting of fuel subsidy and LPG Rp209.92
trillion and subsidy for electricity Rp99.98 trillion, subsidy for seed Rp1.45
trillion, Public Service Obligation [PSO] Rp1.52 trillion, subsidy for program
credit interest Rp1.25 trillion and tax subsidy Rp4.64 trillion.
In tandem with the above, debt was piling up in APBN-P 2013. New debt in
the form of State Promissory Note [SBN] gross was posted at Rp341.4 trillion.
And yet the position of government’s outstanding debt of 2013 came to
Rp2,023.72 trillion. Indonesia’s debt-to-GDP ratio was claimed to drop, but was
no guarantee to sustainability of development considering that the nominal
figure of debt constantly increased each year.
Only trouble was that the nation’s nasty habit relapsed again, i.e. slow
absorption of budget all year through. Low realization of the Central Government’s
debt till end of May 2013 made it difficult for the Government to realize their
commitment to jack up economic development through Government’s financing. Data
of the Directorate General of Treasure, Ministry of Finance had it that
realization of expenditure of the Central Government as per May 31, 2013 was
only posted at 27.5% or Rp317.3 trillion of the Rp1,154.4 trillion ceiling.
Expenditure of Government’s expenditure by end of May 2013 made it
difficult for the government to realize their commitment to spur on economic
development of 2013 to the level of 6.3%, the portion of government expenditure
should be at least 10% of GDP. In fact the government should have maximized
their expenditure since quarter II this year.
Many circles were pessimistic about government ability in realizing
budget absorption at above 94% as promised by Finance Minister M Chatib Basri.
Moreover revision of the Budget Form-filling [DIPA] in the process of APBN-P
2013 state budget had slowed down budget execution. The revision stagnated the
process, so administrative and coordination problem as such must be overcome
although many circles were pessimistic about the present condition.
Maximum budget absorption in quarter II and III had given maximum drive
to economic growth, while improving the budget expenditure structures which
tend to pile up by last quarter of the year. Meanwhile budget absorption in
quarter IV tend to generate impact in the next year.
Furthermore budget performance of capital expenditure and goods buying’s
brought greater impaction economic growth rate. Unfortunately, realization of
goods expenditure by end of May was only recorded at 16.2% or Rp32.6 trillion
of the Rp200.7 trillion ceiling. Worse performance was even shown by capital
expenditure with realization of only 13.8% or Rp25.4 trillion of the Rp184.4
trillion ceiling.
On the other hand, greatest realization was contributed by employee’s
salary expenditure and debt payment obligation. Wages expenditure by end of May
was recorded at Rp88.8 trillion or 36.8% of ceiling. Subsidy expenditure had
come to Rp109.7 trillion or 34.6% of ceiling, while debt payment obligation had
reached Rp43.9 trillion or 38.7% of ceiling.
As if responding to public criticism, Finance Minister Chatib said that
the Ministry of Finance planned to simplify the procedure of budget liquidating
of ministries and institutions, for example by eliminating some administrative
requirement form without ignoring the principles of good governance. As planned
the Minister also planned to increase budget absorption target to 94%. The
government also planned to axe budget expenditure posts which were less
productive to minimize deficit of primary balance sheet. This was necessary to
keep the government from being rated as being unable to pay debts in the
future.
Moreover deficit in primary balance sheet must be anticipated by the
government, as it might create negative image in terms of fiscal management.
Therefore, while trying to increase income, axing of budget other than subsidy
was necessary. The Government was also expected to edge aside political
pressures to carry out the task. Budgetary posts which could be reduced were
also quite numerous, among them was energy subsidy which was off target; the
same was with expenditure posts in Ministries and institutions.
Just to remind, leaking or deviations of budget by ministries and
institutions [K/L] was detected by the posted at Rp72 trillion. To review
budget over the posted at Rp72 trillion. To review budget over the past 3
years, primary trade balance had been constantly posting deficit. It was the
Government’s mission to try to bring back surplus.
Such was felt necessary because it was one of the instruments which
could enable the Government to pay debt. Primary balanced sheet which had
always been in deficit was mostly on account of budget execution not being
maximized. The government was recommended to review the niches which could be
improved and which would not affect fiscal policy design. One thing was sure
primary balancing must be maintained to be positive and surplus for the future.
As reporter the Government was striving to keep budgetary deficit of
next year not to be as big as this year. However such would depend on deficit
in Government’s budget. If deficit was maintained at 1.2% primary balance might
lead to 0%. To attain such, it depended on the Government’s future expenditure
pattern. The point was that the criteria for improving primary balance was by
increasing income and maximizing expenditure; hopefully by the government’s
policy of subsidized fuel, expenditure could be well managed
The issuance of State’s Promissory Notes [SBN] by the Government to
cover up deficit could not be constantly relied on. While it was unsafe for
long run, it was also an unpopular act by the Government. Because the income
post, through tax or other means was till hard to jack up, so the pressing need
now was efficiency. In the event that the government had axed ministrial budget
and reduced subsidy for oil, now that needed to be done was to maximize budget
expenditure.
In the APBN-P 2013, total primary balance was having deficit allocated
Rp120.8 trillion or triple the amount of APBN 2013 at around Rp40.1 trillion.
The government must be cautious of twin deficit, i.e. deficit in state budget
and deficit in trade balance. In case of state budget, one of the solutions was
to increase fuel price. Every Ministry and institutions were in the process of
dissecting the matter with the related commission of House, the target was Rp26
trillion without affecting output and outcome.
To increase price of subsidized oil could also be useful for pressing
deficit. This was so far because deficit in trade balance was on account of oil
gas expenses which deducted was on account of oil and gas expenses which
deducted surplus. Fortunately investment was still sound and this must not be
distributed. Therefore it was recommended that the Government could issues a
policy package to maintain good investment such as tax holiday. (SS)
Business News - July 19,2013
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