Asia

Indonesia parliament passes President Joko Widodo’s US$185 billion budget for 2021

JAKARTA: Indonesia's parliament on Tuesday (Sep 29) approved President Joko Widodo's US$185 billion budget for 2021, which his finance minister described as both supportive for Southeast Asia's largest economy and also the start of a fiscal consolidation.

The budget, which has a smaller fiscal deficit than this year, was approved by acclamation in parliament.

Advertisement

Advertisement

Total spending for 2021 was agreed at 2,750 trillion rupiah ($185.25 billion), 0.4% bigger than the 2020 budget, but the deficit forecast for 2021 was smaller at 5.7% of gross domestic product, compared with 6.34% this year.

This year's budget deficit outlook is the biggest in decades because of increased spending to respond to the coronavirus pandemic.

READ: Indonesias economic stimulus not enough to stop layoffs; focus should be to contain COVID-19, say experts

Indonesia's economy is set to shrink for the first time since the 1998 Asian financial crisis because of the pandemic this year, within a range of -1.7 per cent to -0.6 per cent. The 2021 budget assumes economic growth will rebound to 5 per cent, said Finance Minister Sri Mulyani Indrawati.

Advertisement

Advertisement

"The 2021 budget is supportive and consolidative. Supportive meaning it will continue to support economic recovery … and consolidative meaning the deficit is smaller," she said in a virtual news conference after the budget was passed.

She said the fiscal consolidation would begin next year to meet a self-imposed target to bring the budget deficit to below 3 per cent of GDP by 2023, but pledged the government would try to maintain growth momentum.

READ: Indonesia puts US$33 billion move of capital city on hold to tackle COVID-19 pandemicRead More – Source