On Friday, Joko Widodo, Indonesian President proposed a budget of 2,528.8 trillion rupiah ($177.56 billion) to parliament for 2020, focusing spending on human resources, which was central in his re-election campaign.
The 2020 budget proposals is 3% bigger than 2019’s plans and about 8% larger than the latest government estimate, set a target of 5.3% growth in gross domestic product (GDP), the same as this year’s, although officials have often said 2019 growth would probably range from 5.1% to 5.2%.
It will fund the president’s programmes in the first year of his second five-year term, which officially begins in October.
“The 2020 state budget policy is designed to be expansive, but to remain targeted and measured,” Widodo told parliament.
To fund his budget, Widodo proposed to set a target of 2,221.5 trillion rupiah of state revenue. That brings the fiscal deficit in his budget proposals to 1.76% of GDP, which he said gave room to anticipate global uncertainties.
Chief economist of Maybank Indonesia, Juniman said Widodo’s GDP growth assumption, which is used as the basis of the government’s tax revenue target is unattainable.
“I’m pessimistic the 5.3% growth can be achieved. Given the gloomy global condition and its slowdown trend this year and next, it will be hard for any emerging market to grow faster than this year,” said Juniman, who uses one name, like many Indonesians.
He gave a 5% growth outlook for 2019 and 2020.
Though the president’s GDP growth target was “slightly optimistic”, the tax target was “cautiously realistic”, said Bank Danamon economist Wisnu Wardana.
While Widodo promised to keep building infrastructure in 2020, the budget’s main theme was improving human resources, with the president pledging to “answer to our demographic challenges”.
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