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The 2020 State Budget Draft is Designed to be Expansive Yet Focus and Measurable

Jakarta, 14/06/2019 MoF - Minister of Finance Sri Mulyani Indrawati in a Commission XI House of Representatives (DPR) working meeting provided information on basic assumptions in the Macro Assumption Framework and Fiscal Policy Principles of Draft State Budget Fiscal Year 2020 at the Commission XI DPR Meeting Room on Thursday (13/06).

There are four challenges mentioned by the Minister of Finance. First, the output gap between supply and demand is getting smaller. Second, changes in demography. Third, the trap to be a middle income trap country, and fourth is structural change.

"Projections for 2030 population numbers above 60 years old will increase from 7% to 13%. Urbanization will also continue. This is a challenge for food security and infrastructure. The increasing consequences of the middle income class will affect demand and the level of mobility," she explained in the meeting was also attended by Head of National Development Planning Agency Bambang Brodjonegoro, Governor of Bank Indonesia (BI) Perry Wardjiyo, Chairman of the Board of Commissioners of the Financial Services Authority (DK OJK) Wimboh Santoso, and Head of the Statistics Indonesia (BPS) Suhariyanto.

In addition to domestic challenges, global economic conditions also have an impact on macro assumption. Challenges that still occur include trade wars and protectionism and fluctuations in commodity prices. This, according to her will be able to influence tax revenues as well as Non-Tax Revenue (PNBP) of Natural Resources (SDA) due to the decline in Indonesia Crude Price (ICP), exchange rates, and commodity prices.

Thus, the fiscal 2020 strategy that set is expansive but still focus and measurable. The tax ratio will range from 11.8% to 12.4% of Gross Domestic Product (GDP), deficit of 1.52% to 1.75%, primary balance 0.0% to 0.2%, and debt ratio 29, 4% to 30.1% of GDP.

"Our deficit is set lower because we see volatility. Therefore, we want to be more prudent," said the Minister of Finance.

The presentation was closed with a request for approval of the macroeconomic assumption by the Minister of Finance, namely economic growth at the rate of 5.3% to 5.6%, inflation 2.0% to 4.0%, interest rates on Treasury Bills (SPN) 3 months 5.0 % to 5.6%, and exchange rates in the range of 14,000 to 15,000. (mr/hpy/nr)