FILE PHOTO: Finance Minister of Indonesia Mrs. Sri Mulyani Indrawati in Speech in Jakarta. Image: Shutterstock

Indonesia’s government is not in discussions that could allow the country’s fiscal deficit to go beyond the current legal limit of 3% of gross domestic product (GDP), a senior finance ministry official said on Wednesday. 

Bloomberg News quoted Finance Minister Sri Mulyani Indrawati as saying such a move was being discussed by President Joko Widodo and cabinet ministers. 

“The (finance) minister has clarified that article is not correct,” Askolani, the ministry’s director general of budgeting, told Reuters. 

“The government is still following the mandate of the State Finances Law regarding the state budget deficit limit and the debt ratio.” 

Askolani, who uses one name, was referring to a 2003 law stipulating that the budget deficit in a fiscal year cannot be more than 3% of GDP and total public debt cannot breach a limit of 60% of GDP. 

The limits were introduced in the aftermath of the Asian financial crisis in the late 1990s to avoid excess borrowing. 

This year, weak tax income is set to push the fiscal deficit to 2.2% of GDP, compared to an initial forecast of 1.84%, according to the latest estimate by finance ministry officials. 

Some economists have criticized Indrawati for her conservative fiscal policy at a time when economic growth is slowing. Indrawati has projected a fiscal deficit of 1.76% of GDP in 2020.

Reuters | JAKARTA


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