Indonesia books 2023 fiscal deficit of 1.65%, smaller than planned

Indonesia has reduced its 2023 budget deficit significantly to 347.6 trillion rupiah (S$29.7 billion), equivalent to 1.65 per cent of gross domestic product (GDP), based on unaudited figures, its finance minister said on Tuesday (Jan 2).

The unaudited deficit was far smaller than the government’s original 2023 fiscal deficit plan of 598.2 trillion rupiah, said Sri Mulyani Indrawati.

Indonesia’s fiscal deficit in 2022 stood at 2.35 per cent of GDP.

Last year was also the first year since 2012 when the government booked a primary surplus, Sri Mulyani said, referring to the fiscal balance excluding net interest payments on public debt.

The government spent 3,121.9 trillion rupiah in 2023, 0.8 per cent up from the previous year, while revenues rose 5.3 per cent to 2,774.3 trillion rupiah.

Indonesia has been trying to cut its fiscal deficit to navigate rising borrowing costs globally and better manage its existing debt after large expenditure during the Covid-19 pandemic.

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The small deficit in 2023 came even as economic activity in Indonesia slowed with its exports shrinking amid falling commodity prices and weakening global trade.

Indonesia’s GDP growth likely decelerated to around 5 per cent in 2023 from 5.3 per cent in the year earlier, Sri Mulyani said, predicting growth of 5.2 per cent in 2024.

In the third quarter, South-east Asia’s largest economy expanded 4.94 per cent on an annual basis, the weakest in two years. REUTERS