JAKARTA: The Indonesian government and House of Representatives have settled on an economic growth target of 5.1 percent for 2017, anticipating weak government spending to continue next year.
The target was lower than the 5.2 percent target set for 2016 and the 5.3 percent target for 2017, proposed by President Joko “Jokowi” Widodo’s government in his independence day speech last month.
The government expects growth to be hampered by problems in collecting sufficient tax revenue, weak commodity exports and uncertainty surrounding the tax amnesty program. These issues have forced the government to cut spending so far this year, Finance Minister Sri Mulyani Indrawati said on Wednesday (07/09).
“We don’t want to keep revising the budget, if we had to revise [the budget], I hope it will be an upgrade,” the finance minister said, as quoted by Antaranews.com.
The decision came after a steady debate between the government and lawmakers, who preferred the growth target to be set as 5.05 percent instead, arguing that it is more achievable. However, the finance minister said that the figure lacks optimism in Indonesia’s economy and could send the wrong message.
The finance minister also cited Indonesia’s strong household consumption, infrastructure spending and capital inflow, which are reliable engines to achieve the 5.1 percent growth target. Indonesia’s gross domestic product growth had slowed down since 2011 with last year’s 4.8 percent growth being its weakest expansion since the global financial meltdown.
Signs of a rebound, though, have emerged as Indonesia had stronger-than-expected annual grOwth of 5.18 percent in the second quarter of this year, compared with 4.91 percent in the first quarter.
