ADDRESS OF THE PRESIDENT OF THE REPUBLIC OF INDONESIA ON THE PRESENTATION OF THE GOVERNMENT STATEMENT ON THE BILL ON THE STATE BUDGET FOR THE 2019 FISCAL YEAR AND ITS FINANCIAL NOTE BEFORE THE PLENARY SESSION OF THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA
Unofficial English Translation
Bismillaahirrahmaanirrahiim,
Assalamualaikum Warahmatullaahi Wabarakatuh,
May we be bestowed with peace and prosperity,
Oom Swasti Astu,
Namo Buddhaya,
Greetings of virtue.
Honorable Speaker, Vice-Speakers, and Members of the House of Representatives of the Republic of Indonesia,
Honorable Speaker, Vice-Speakers, and Members of the Regional Representatives Council of the Republic of Indonesia,
Honorable Heads, Vice-Heads and Members of State Institutions,
Honorable Ministers of the Working Cabinet and Heads of Non-Ministerial Government Institutions,
My Fellow Countrymen, and Distinguished Ladies and Gentlemen,
Let us express our profound gratitude to God the Almighty, the One and Only God, for it is with His mercy and blessing that we are today able to attend the Plenary Session of the House of Representatives of the Republic of Indonesia to deliver the Government Statement on the Bill on the State Budget for the 2019 Fiscal Year and Its Financial Note.
The 2019 Bill on the State Budget constitutes the fifth year or the final year of the Development Program of the Working Cabinet. In the last four years, we have laid a robust foundation by reforming the direction of national development to become more productive, more equitable, and more just. This foundation becomes our common ground to face the future, completes the promise of independence, towards an advanced Indonesia that is politically sovereign, economically independent, and possesses a culturally distinctive personality.
The concrete work undertaken during these last four years has not always been easy, owing to the the national and global economic environment that continue to evolve very dynamically, which require us to be well-prepared, make careful anticipation, and make rapid adjustments.
We have had to face a multitude of challenges, from the fluctuation of commodity prices to the latest global economic volatility that is triggered by the trade policy and rise of interest rates in the United States. As a repercussion, we are now facing a situation whereby emerging market countries are under pressure, both from the aspect of exchange rates as well as from the aspect of capital inflow. Moreover, several emerging market countries have even been hit by crises that are precipitated by their domestic economic and political conditions.
In the face of such external pressures, the Government moves swiftly to maintain the stability and resilience of our economy by continuing to drive national economic competitiveness, manage a healthy and productive State Budget, and strengthen the coordination of fiscal and monetary policies. We also take firm and consistent steps to control imports. In addition, we continue to spur exports and increase capital inflows by using fiscal instruments, providing incentives, and ensuring that licensing reforms can run effectively.
Alhamdulillah, Praise be to the Almighty, amidst the global economic uncertainty, we are still able to maintain a relatively sound and stable economic performance. A relatively high economic growth has been consistently posted from 5 percent in 2014 to 5.17 percent in the first semester of 2018. The low inflation rate has decreased from 8.36 percent in 2014 to around 3.18 percent in July of 2018.
Distinguished Ladies and Gentlemen,
This economic performance has been able to improve the main indicators of the peoples welfare. The open unemployment rate has decreased from 5.70 percent to 5.13 percent. The poverty rate decreased from 11.25 percent in 2014 down to one digit of 9.82 percent in 2018. In addition, the Gini Ratio as an indicator of income gap has decreased from 0.406 to 0.389. And the Human Development Index (IPM) is expected to rise to 71.5 in 2018. Improving the indicators of the peoples welfare continues to be pursued in the midst of the existing dynamics.
The fiscal and structural reforms carried out by the Government has restored Indonesia to an investment grade level from all international rating agencies. The ranking in the Ease of Doing Business (EoDB) index has also climbed sharply, leapfrogging 48 places within the last three years. The Logistic Performance Index of Indonesia has also climbed 7 places within the 2014 2018 period.
Those achievements should become triggering factors for all of us to keep working in earnest for the improvement of the welfare of all Indonesian people.
Distinguished Ladies and Gentlemen,
Our collective hard work in carrying out economic reforms has ushered us to a growth momentum. Reforms in the fiscal sector have resulted in a healthy, just, and independent State Budget. It is healthy because the State Budget is drawn up in a prudent, realistic, and effective manner to advance the development of Indonesia and it is also anticipative in facing domestic and global challenges.
Structural improvements continue to be spurred in the attempt to accelerate economic growth, strengthen the competitiveness of our nation, fortify our economic resilience, and strengthen the micro, small, and medium-size enterprises. We must continue to stimulate investment, exports, and tourism as engines of economic growth that generate productivity, high added value, and state foreign exchange.
In support of those goals, the 2019 fiscal policy and State Budget is drawn up with the theme A State Budget to Support Investment and Competitiveness through the Development of Human Resources.
This theme is realized through three main strategies, namely mobilizing realistic incomes by maintaining a conducive investment climate, improving the quality of expenditures in order to be more productive and effective through the policy of value for money in support of priority programs, and promoting efficiency and financing innovation.
Honorable Speaker, Vice-Speakers, and Members of the House,
The outlook and projection of the Indonesian economy that will serve as the basis for making the Basic Assumptions for the 2019 Bill on the State Budget are estimated to be still very dynamic and challenging.
The Government will encourage economic growth within the range of 5.3 percent. This growth will be increasingly just and equitable by encouraging faster economic growth in eastern Indonesia, the border regions, and other regions that are still lagging behind; Strengthen ultra micro, micro, small, medium enterprises and cooperatives; Curb inter-regional inequalities and reduce the gap between income groups; Strengthen the village economy and reduce poverty in a more focused and faster manner.
From a sectoral perspective, the economic sectors that have high added value and create employment opportunities need to be further encouraged. The private sector is encouraged to play a greater role so as to be able to create equitable social welfare. With the increasingly growing middle class, the domestic market is becoming more robust. To that end, strengthening the processing industry that can create added value needs to be encouraged and developed by strengthening the upstream to downstream industries.
The investment climate continues to be improved so as to become efficient and measurable through deregulation, debureaucratization, and simplification. It is important to encourage the development of industries, particularly the small- and medium-scale industries in the sectors of manufacturing, construction, and services industry, including digital-based industries which rely heavily on the quality of productive and innovative human resources. The implementation of the one-stop integrated service (PTSP) and the online single submission (OSS) are expected to be effective in reducing bureaucracy and facilitating the business people.
In order to encourage the development of micro, small, and medium enterprises (UMKM), the Government has reduced the final Income Tax rate for UMKM to only 0.5 percent. In the period of 2015 up to the first semester of 2018, the Peoples Business Credit (Kredit Usaha Rakyat/KUR) Program has been disbursed in the amount of Rp299.9 trillion with the value of the realization of KUR interest subsidies of Rp32.1 trillion and has been enjoyed by 12.3 million UMKM. The ultra micro revolving fund program for the people at the lowest level has been distributed in the amount of Rp1.1 trillion to 392.1 thousand micro businesses. In 2019, the Government continues to increase assistance to UMKM and Cooperatives through KUR subsidies which will reach Rp12.2 trillion and revolving funds for ultra micro businesses amounting to Rp3 trillion.
In promoting high and inclusive economic growth, the household consumption growth needs to be sustained and investment and exports need to be encouraged to be increased. In 2019, the Government will endeavor to maintain the inflation rate within the range of 3.5 percent plus/minus 1 percent. Low inflation rates will not only encourage the domestic economy to be more efficient and competitive, but they will also guarantee the ability of the people to meet their basic needs.
Inflation control is carried out by maintaining the supply availability of goods and services, particularly food, through increasing national production capacity and efficiency along the supply chain. On the other hand, the peoples purchasing power continues to be maintained through various social protection programs particularly for the poor and low income people.
The Government realizes that in 2019 various factors will still become challenges in maintaining the stability and fluctuation of the Rupiah exchange rate both from the dynamics of the developed countries including the normalization of monetary policy in the United States of America and Europe as well as the economic development of China. We need to realize together that this challenge will not only be faced by the Rupiah but also by numerous global currencies. The Rupiah exchange rate in 2019 is estimated to be in the range of Rp14,400 per US dollar.
My Fellow Countrymen,
The trade policies and interest rate hikes in the United States affect the financial conditions in the domestic market, including the fluctuation of the 3-month Government Treasury Bills (SPN). Nevertheless, with the support of improvements in the performance of the national economy and the controlled inflation rate, the pressures from the global economy are expected to be mitigated. By taking those factors into account, the 3-month SPN rate in 2019 is estimated to average 5.3 percent.
Indonesias Crude Oil Price (ICP) in 2019 is estimated to average US$70 per barrel. The ICP fluctuation, coupled with the dynamics of world crude oil prices, is increasingly difficult to predict. In 2019, a number of factors that are estimated to affect world crude oil prices and the ICP are global geopolitics, increasing demands in conjunction with global economic recovery, and the use of alternative energy.
The oil lifting in 2019 is estimated to reach an average of 750 thousand barrels per day. In the meantime, gas lifting is estimated to reach an average of 1,250 thousand barrels of oil equivalent per day. The estimation of these lifting levels is made based on the production capacity and the natural declining levels on the existing oil and gas fields, additional projects that will soon be operational, and planned production activities in 2019.
The entire macro economic outlook described above constitutes the basis for drawing up the 2019 Bill on the State Budget.
Honorable Speaker, Vice-Speakers, and Members of the House,
In the 2019 Bill on the State Budge, the state expenditures are estimated to reach Rp2,439.7 trillion or around 15 percent of Indonesias Gross Domestic Product. This figure is 10 percent higher than the estimated realization of state expenditures in 2018 or an increase of 37.3 percent compared to the state expenditures in 2014 that amounted to Rp1,777.2 trillion. The quality of state expenditures will be increasingly improved and focus will be maintained on boosting the economy and in realizing an equitable and just peoples welfare.
For this reason, the state expenditures in 2019 will be geared towards reinforcing social protection programs, enhancing the quality of human resources, accelerating infrastructure development, undertaking bureaucratic reform, and strengthening fiscal decentralization.
The Government remains committed to providing social protection guarantees particularly for the 40 percent of Indonesias population living under extreme poverty. In 2018, the Government will channel fund to 92.4 million beneficiaries of the National Health Insurance (Jaminan Kesehatan Nasional/JKN) and to 10 million beneficiary families of the Aspiring Family Program (Program Keluarga Harapan/PKH). In 2019, the Government will strengthen the Aspiring Family Program by raising the amount for the beneficiaries of the 100 percent benefit with a targeted objective of 10 million beneficiary families. In addition, the Government will also increase the number of the National Health Insurance (JKN) recipients to 96.8 million people.
In the meantime, the Non-Cash Food Assistance program (Bantuan Pangan Non-Tunai/BPNT) that has been implemented since 2017 has reached 1.28 million beneficiary families. In 2019, the target of the Non-Cash Food Assistance program (BPNT) will be increased gradually to reach 15.6 million beneficiary families in order to replace the prosperity rice program. The Government will also strengthen the Agrarian Reform and Social Forestry (Reforma Agraria dan Perhutanan Sosial/RAPS) program as a form of management of productive assets and support for farmers and the poor, and continue the certificates for people program with a target of 9 million land certificates in 2019. Therefore, during the 2014-2019 period, 25 million land certificates are expected to be issued. This myriad of social programs are the concrete manifestation of the presence of the Government in protecting the entire nation and the homeland of Indonesia.
Distinguished Ladies and Gentlemen,
The most important assest for Indonesia is its people. Consequently, the Government does not only prioritize physical investment but also advances human resources investment through the formulation of policy breakthroughs intended to increase the quality of the Indonesian people who have the capacities to compete in the international arena. In order to further improve the quality of human resources, in line with the mandate of the Constitution, the Government has allocated a budget for the Education sector to the tune of 20 percent of the state expenditures. In 2019, the budget for the Education sector is planned to amount to Rp487.9 trillion, or an increase of 38.1 percent compared to the realization of the education budget in 2014, that amounted to Rp353.4 trillion.
Alhamdulillah, by the Grace of the Almighty God, the Government is able to execute policy action programs in order to support the development of human resources. The Government has granted education assistance and scholarships for students from the levels of kindergarten, up to elementary school, junior high school, and senior high school, as well as for the students of Islamic elementary school, junior high school, and senior high school, and even up to the highest educational level of doctorate for all children of the nation who have the potential, particulary those who are underprivileged. The budget for School Operational Assistance (Bantuan Operasional Sekolah/BOS) has been able to increase the real participation rate of students of elementary school, junior high school, and senior high school as well as students of Islamic schools. In 2019, the Government will grant scholarships to 20.1 million students through the Smart Indonesia Program and 471.8 thousand university students through the Bidik Misi scholarship. Furthermore, during the period of 2014-2019, the Government has also made an investment through the Endowment Fund for Education (Lembaga Pengelola Dana Pendidikan/LPDP) by granting scholarships to around 27 thousand university students from all over the country to pursue their education to the masters and doctoral degrees in the best universities of the country and overseas, as well as funding 123 selected research contracts.
The state expenditures for the education sector in 2019 will also be directed towards reinforcing the School Operational Assistance (Bantuan Operasional Sekolah/BOS) program for 57 million students, enhancing the capacity of civil servant and non-civil servant teachers through occupational allowances, as well as accelerating the construction and renovation of school buildings. Moreover, the expenditures will also be directed towards building 1,407 Vocational High School workshops and providing 3,000 university students with training/certification assistance, strengthening more massive and inter-ministerially-integrated vocational programs, as well as building classroom and laboratory facilities in 1,000 Islamic boarding schools (Pesantren).
In order to strengthen healthcare services, in 2019 the Government is allocating Rp122 trillion for healthcare budget or twice as much from the healthcare budget in 2014 that amounted to Rp59.7 trillion. Since 2016, in accordance with the Health Law, the Government has consistently maintained the healthcare budget to the tune of 5 percent of the state expenditures. The various healthcare programs that have been implemented by the Government to date have yielded concrete results as shown by the increasing equitable distribution and quality of healthcare services, the availability and distribution of medicines, the healthcare resources in the regions, as well as the increasing life expectancy and household access to clean sanitation.
In 2019, we will continue to carry out priority programs in the health sector by strengthening healthcare services to the community, among others by providing quality facilities and infrastructure for 48 hospitals/healthcare clinics, and strengthening the integrated stunting reduction program in 160 regencies/ municipalities. In order to overcome childrens nutritional issues, the Government will also promote the provision of additional aliments to 525,420 expectant mothers and 1.5 million underweight infants and toddlers, and the immunization of children aged 0-11 months to reach 90 percent.
Through these various social protection programs, it is expected that the poverty rate in 2019 will fall again to 8.5 percent to 9.5 percent and the Human Development Index will rise to 71.98.
Honorable Speaker, Vice-Speakers, and Members of the House,
In addition to enhancing the development of human resources, the Government also continues to develop the infrastructure. The budget allocation for infrastructure, which in 2014 only amounted to around Rp154.7 trillion, was escalated to Rp256.1 trillion at the beginning of the Working Cabinet (Kabinet Kerja) in 2015, in the 2019 Bill on the State Budget it is to be boosted to Rp420.5 trillion. This infrastructure development strengthens connectivity, connects various economic potentials throughout Indonesia, equates development, generates new economic activities, and improves the distribution of goods and services which end result is the enhancement of the people’s welfare, the reduction of poverty and unemployment, and the reduction of inequality.
Since 2015 to date, the Government has built roads, reconstructed and widened national roads to a length of 12,783 kilometers, has built 11 new airports, and from 2016 to 2017, has built approximately 369 kilometers of railway lines. We have also provided guarantees for priority energy infrastructure development programs, such as the construction of the first phase of 10,000 MW power plants, digital infrastructures in the form of internet access in non-commercial and broadband areas in villages, guarantees for drinking water supply programs to 11 Regional Drinking Water Companies (Perusahaan Daerah Air Minum/PDAM), and guarantees for cooperation programs between the Government and Business Entities. On the other hand, in order to provide housings for the people, the Government has facilitated the ownership of 781 thousand housing units for low-income people through the provision of revolving funds, interest subsidies, down payment assistance, and tax incentives.
In 2019, we will continue to complete the infrastructure development targets which are necessary for regional development. By utilizing the State budget as a catalyst, the Government plans to build 667 kilometers of new national road stretches, 905 kilometers of toll roads, 48 dam units, and 162 thousand hectares of irrigation networks.
We will make various breakthroughs to accelerate the infrastructure development in the fatherland by using non-state budget financing schemes for infrastructure development, by involving private parties. Nevertheless, amidst the volatile global situation, the Government will be prudent in maintaining infrastructure financing to minimize its risks and make it sustainable.
In the last few years, several measures have been taken by the Government to improve bureaucratic performance, strengthen bureaucratic reform, through the implementation of electronic-based governance systems, such as e-procurement, One Data, and One Map, strengthening bureaucratic reforms, and improving public services quality for instance with the Public Service Mall. These bureaucratic reform endeavors have lifted Indonesias ranking in the Government Effectiveness Index from 103rd in 2015 to 86th in 2016 or a jump of 17 places.
The Government has also accelerated reforms at 86 Ministries/Institutions in order to provide better, easier, faster, and more transparent public services coupled with the implementation of electronic-based governance systems. The enhancement of bureaucratic quality and motivation continues to be carried out in order for the state apparatus to be more professional, cleaner, and have its welfare secured. To that end, aside from sustaining the salary policies that have been implemented in 2018, the Government will, in 2019, raise the basic salary and basic pension of civil servants and pensioners by an average of 5 percent.
Distinguished Ladies and Gentlemen,
In 2019, in a bid to accelerate regional development, the Government plans to allocate the Transfer to the Regions and Village Funds in the 2019 Bill on the State Budget amounting to Rp832.3 trillion. This amount is an increase of 9 percent from the estimated realization in 2018 or an increase of 45.1 percent from the realization in 2014 that amounted to Rp573.7 trillion. In the last couple of years, the budget increase for the Transfer to the Regions and Village Funds has been able to improve the performance of basic public services in the regions, which is reflected in the improvement of several indicators of community welfare. During the 2014-2017 period, the Interregional Inequality Index decreased from 0.759 to 0.668, the percentage of childbirths attended by health personnel increased from 87.1 percent to 93.3 percent and the households access to decent sanitation increased from 61.1 percent to 67.9 percent.
Furthermore, through the implementation of the Village Fund which budget began to be allocated since 2015, a number of infrastructures and facilities that are useful for the community have been built. The Village Fund budget realization amounting to Rp127.2 trillion in the 2015-2017 period has been utilized among others to build approximately 124 thousand kilometers of village roads, 791 kilometers of bridges, access to 38.3 thousand clean water units, approximately 3,000 boat mooring units, 18.2 thousand schools for the Early Childhood Education Program (Pendidikan Anak Usia Dini/PAUD), 5.4 thousand Village Maternity Clinics (Poliklinik Desa/Polindes), 6.6 thousand village markets, 28.8 thousand irrigation networks, 11.6 thousand Integrated Service Posts (Pos Pelayanan Terpadu/Posyandu), and approximately 2,000 water retention basins.
The Government has also fine-tuned the allocation of Village Funds to make them more beneficial to underdeveloped villages and severely underdeveloped villages where extremely poor residents reside. The Village Fund is also used for labor-intensive schemes to increase income and strengthen the purchasing power of villagers as well as to increase economic growth and welfare of the village community.
Furthermore, as of the First Semester of the 2018 Fiscal Year, the Village Fund realization has reached Rp35.9 trillion or 59.8 percent of the budget ceiling. The realization of this fund has among others funded the construction of 5.3 thousand kilometers of village roads, 24.1 kilometers of bridges, access to 6 thousand clean water units, 508 boat mooring units, 1.6 thousand schools for PAUD, 910 Polindes, 845 village markets, 10.8 thousand irrigation networks, 677 Posyandu and 664 water retention basins.
Based on these achievements, and coupled with our sustained improvement evaluations, the Government is convinced that with a Rp832.3 trillion budget for the Transfer to the Regions and Village Fund in 2019, we will boost the equitable development throughout our 34 Provinces, 508 Regencies/Municipalities, and 74,957 villages.
In addition to those priority expenditures, the Government will, in 2019, also allocate sufficient fund to support the organizing of democratic fiesta to elect parliamentary members, the President, as well as the Vice-President that will be held simultaneously for the very first time in 2019. A significant amount of budget will be also allocated for the defense and security sector in order to safeguard the smooth-running of the Indonesian democratic fiesta, the safe implementation of development programs, and to maintain the integrity of the Unitary State of the Republic of Indonesia.
With the aforementioned expenditures, the State Budget is drawn up in a just manner in which each Rupiah collected from the people is redistributed for the welfare of the entire people of Indonesia and to accelerate the equitable distribution of development to the outermost villages of the archipelago.
Honorable Speaker, Vice-Speakers, and Members of the House,
The State Budget independence is realized by further prioritizing on, and relying on, development financing from domestic sources of revenue. This principle of State Budget independence is evidenced by an increasingly larger role of tax revenues as the main contributor of state revenue. In 2014, tax revenues accounted for 74 percent of the State Budget or Rp1,146.9 trillion, and in 2018, it is estimated to reach 81 percent or Rp1,548.5 trillion.
The higher role of the tax revenues in funding the State Budget is inseparable from the efforts of the Government to continuously improve tax performance through policies, tax strategies, and implementation of sustainable tax reforms, and supported by the improvement in tax compliance of the tax payers. In the framework of sustained tax reforms, we are grateful for the fact that in 2016 and 2017, Indonesia successfully implemented the Tax Amnesty program which serves as a milestone of a new era of tax compliance in Indonesia.
In addition to exploring revenue sources, the Government will also continue to maintain the investment climate and the progress of the domestic business world through tax incentive policies. The Government has also issued special tax regulations as incentives for small- and medium-scale enterprises and to expand the tax base as follow-up to the result of the Tax Amnesty program though the Automatic Exchange of Information (AEoI). In the future, the tax policies are also expected to be more accommodative to face trends in the digital economy and to optimize the use of information technology in supporting tax administration.
In 2019, we will consistently make endeavors to explore revenue sources realistically and by considering the principle of justice, maintain investment climate, carry out environmental conservation, and improve the quality of public services. State Revenues and Grants are estimated to reach Rp2,142.5 trillion which encompasses tax revenues amounting to Rp1,781.0 trillion and Non-Tax State Revenues (Penerimaan Negara Bukan Pajak/PNBP) amounting to Rp361.1 trillion and Grants amounting to Rp0.4 trillion. State Revenues and Grants in 2019 show a 12.6 percent increase from their estimation in 2018, they even rose by 38.2 percent from Revenues and Grants in 2014 that amounted to Rp1,550.5 trillion.
From the taxation perspective, the policy direction in 2019 will be implemented by collecting state revenue sources from national economic activities, as well as by continuously promoting higher compliance through tax administration reforms that are simpler and more transparent. With this policy direction, and witnessing the positive development of tax revenues supported by the momentum of economic growth, it is expected that the tax ratio in 2019 can reach 12.1 percent against the Gross Domestic Product, rising from the estimation in 2018 at 11.6 percent.
The Government will continue to give tax incentives through a host of instruments, namely sectoral tax incentives to support priority sectors, among others through the tax holiday policy, tax allowance, import duty exemption facility, and tax subsidies; regional tax incentives, among others the Special Economic Zones, industrial zones, and bonded warehouse areas; special tax incentives to boost exports, among others through Export Destination Import Ease, export special assignments, and bonded warehousing areas. In order to support vocational education and research and development, the Government will also provide special tax incentives in the form of tax reduction facility.
In the meantime, the essence of the non-tax state revenue policy in 2019 will be directed towards optimizing revenues by optimizing the management of natural resources and assets, by still prioritizing public service quality and preserving the environmental sustainability. In optimizing the non-tax state revenues (PNBP) from natural resources (Sumber Daya Alam/SDA), the Government continues to improve the governance and transparency of natural resource management in Indonesia and to maintain the management and sustainability of natural sustainability. With the revision of the PNBP Law, it is hoped that the management of PNBP will be better and optimal while still taking into account the justice of the public and the sustainability of natural resource management in the future.
Distinguished Ladies and Gentlemen,
The 2019 State Budget financing will be carried out accountably. The budget deficit and debt-to-GDP ratio will be sustained within safety limits based on Law Number 17 of the Year 2003 on the State Finances. The debt management is conducted in a more prudent fashion to reduce the risks and costs, as well as to direct its utilization in a more productive manner for development programs in the sectors of education, health, infrastructure, social protection, and regional development.
In 2019, the Government continues to adopt a measured expansionary fiscal policy in order to boost sustainable and just economy for the maximum benefit of the entire people of Indonesia. The proportional expansionary fiscal policy is carried out in a prudent manner to maintain fiscal continuity in the future. This is evidenced by decreasing Deficit of the State Budget, from 2.59 percent of the 2015 GDP to 2.12 percent in 2018, and in 2019 the deficit will be lowered to 1.84 percent. The direction of the manageable State Budget has shown that the Government has always managed the fiscal prudently and accountably as well as provided guidance to improve a just and equitable peoples welfare.
The improvement of fiscal policy is also evidenced by the deficit of primary balance which, in 2015, reached Rp142.5 trillion and down to only Rp64.8 trillion in 2018, and is constantly directed to go much lower to a deficit of Rp21.7 trillion in 2019. By that fiscal policy direction, it is expected that we will be able to reach a balanced condition of primary balance or surplus in the near future.
Besides a decrease in budget deficit, to control additional debts, the Government also reduces budget financing in 2019 by 5.4 percent. This control measure is consistent with the measure adopted in 2018 that also reduced financing by 14.3 percent. In the previous years, we still saw an increase in financing due to fiscal expansion to stabilize and reduce the impact of the decline of commodity prices at that time.
With decreasing State budget deficit and decreasing primary balance deficit, with realistic increase in revenues, with more quality and well- targeted expenditures, as well as prudent and productive financing, the State Budget is expected to be more healthy, just, and independent.
Honorable Speaker, Vice-Speakers, and Members of the House,
This is the Government Statement on the Bill on the State Budget for the 2019 Fiscal Year and Its Financial Note. It is our hope to have the support, inputs, and cooperation of the entire honourable Members of the House in the deliberations on the 2019 Bill on the State Budget.
We must be fully aware that the State Budget is the peoples money that we need to safeguard together and utilize wisely for the needs of the people at present as well as for future generations.
To conclude, allow me to make a point that economic policy and economic management do not exist in a vacuum. A dynamic and harmonious socio-political condition provides a positive contribution to the implementation of effective and optimal policies, which thereby accelerates the increase in peoples welfare. Therefore, we have every hope that the House of Representatives continues to lend its support to the government, to work closely together to make Indonesia an advanced, sovereign, self-sufficient nation, distinct in personality based on Pancasila and the 1945 Constitution.
May God the Almighty bestow His Blessings upon us in order to carry out the tasks and mandate placed by the entire people of Indonesia. Remember, Our Works are our Nations Achievements!
Long Live the Republic of Indonesia!
Long Live the Land of Pancasila!
I thank you,
Wassalamualaikum Warahmatullaahi Wabarakatuh,
Om Shanti Shanti Shanti Om,
Namo Buddhaya
Jakarta, 16 August 2018
PRESIDENT OF
THE REPUBLIC OF INDONESIA
JOKO WIDODO