Tuesday, 25 June 2019 | 06:24 WIB

Here are the Macro Economy Assumption Suggestions for the 2020 Draft State Budget

Indonesia Finance Minister Sri Mulyani (kemenkeu)

JAKARTA, NETRALNEWS.COM - Indonesia Minister of Finance Sri Mulyani Indrawati delivered an Introduction and Government Statement on the Macro Economic Framework and the Principles of Fiscal Policy (KEM-PPKF) for the Preliminary Discussion Material 2020 preparation of the State Budget Revised Budget (RAPBN) 2020.

"The Principles of Fiscal Policy 2020 are designed to be able to become policy instruments that can ensure the direction of achieving short, medium and long-term economic development targets," Sri Mulyani said said at the House of Representatives Plenary Meeting on Tuesday (05/21/2019).

Representing the Government, Minister of Finance Sri Mulyani Indrawati submitted the Macroeconomic Framework amount as follows: a. Economic growth of 5.3-5.6%; b. Inflation rate of 2.0-4.0%; c. The interest rate of the 3-month SPN is 5.0-5.6%; d. The exchange rate of the Rupiah is in the range of Rp14,000-15,000 / US dollar; e. Indonesia's crude oil price is 60-70 US dollars / barrel; f. Lifting Petroleum as much as 695-840 thousand barrels per day; and g. Lifting natural gas 1,191-1,300 thousand barrels of oil equivalent per day.

Regarding the fiscal macro strategy that will be implemented by the Government for expansionary fiscal policy, the Minister of Finance said there are three strategies.

First, revenue mobilization for widening fiscal space. Second, better spending policies for spending efficiency. Third, increase capital expenditure to form assets and develop creative payments and risk mitigation to control liabilities.

"Fiscal policy is also directed at improving government balance sheets, which are marked by increased assets, controlled liabilities, and increased equity," continued the Minister of Finance.

In terms of income, the government continues to increase the tax ratio through Tax Reform so that it is expected that in 2020 it can reach 11.8-12.4% of GDP.

In addition, state revenues will be boosted through the reform of management of Non-Tax State Revenues (PNBP) through optimizing the management of assets and natural resources, maintaining the quality of public services, improving management of state assets, including insuring them against natural disasters. The government estimates that PNBP in 2020 can reach 2.0-2.5% of GDP.

Meanwhile, state expenditure in 2020 is estimated to reach the range of 14.4-15.4% of GDP. The government encourages higher quality spending to be implemented through massive savings in goods spending, strengthening capital expenditure, reform of personnel spending, increased effectiveness including the accuracy of the target of spending on social assistance and subsidies as well as strengthening transfer spending to the regions and Village Funds.

At present, more than a third of state expenditure is allocated to Transfer to Regional and Village Funds (TKDD) expenditure, improving the quality of fiscal decentralization is expected to drive regional economic improvements.

As a consequence of expansionary fiscal policy, the APBN posture is proposed to experience a measurable deficit and continue to safeguard funding sources safely, carefully and sustainably. The debt deficit and ratio will remain controlled within safe limits while encouraging a positive primary balance.

"The government will continue to encourage the role of the private sector in financing development through a framework of cooperation between government and business entities (PPP), including encouraging the issuance of other creative financing instruments," said the Minister of Finance.

As the opening year of the new government period, according to Minister of Finance, the deficit policy in 2020 will be at the level of 1.75-1.52% of GDP, a positive primary balance, and a debt ratio of around 30% to GDP