Published on 07 Jan 2020. | Source: thestar.com.my
JAKARTA: Indonesia had a nearly $15 billion revenue shortfall last year as slowing economic growth hit government finances and widened the budget deficit, officials said on Tuesday, with analysts warning of more difficulties this year.
The unaudited 2019 fiscal deficit was equal to 2.2% of gross domestic product (GDP), in line with the government's latest estimate but wider than its initial plan of 1.8%, according to finance ministry data.
Weak company profits, falling exports and sluggish economic growth have cast a shadow over tax collections.
Finance Minister Sri Mulyani Indrawati said a total of 1,957.2 trillion rupiah ($140.86 billion) in revenue was collected last year, only 0.7% more than the previous year and 207.9 trillion rupiah below target.
Corporate tax payments by companies in mining, manufacturing and the oil and gas sectors shrank. Total value added and luxury tax receipts were also down by 0.8% from 2018.
Indrawati said many assumptions that the budget had been based on were missed, including behind-target oil and gas lifting and higher-than-anticipated bond yields.
The government also failed to reach its economic growth target of 5.3% last year, with officials saying growth was likely 5.05%. The government has targeted 5.3% growth for this year too.
Meanwhile, total spending in 2019 was 2,310.2 trillion rupiah ($166.25 billion), around 94% of the targeted amount.
The government will likely face more headwinds in tax collection this year, analysts say, putting pressure on plans to increase spending to $180 billion in 2020, while lowering the budget deficit to 1.76% of GDP.
Predicting a growth of between 7.4% to 9.7% in tax payments, Bawono Kristiaji, a tax researcher with the Jakarta-based Danny Darussalam Tax Center, forecast a shortfall in revenues of as much as 180.6 trillion rupiah this year.
Wisnu Wardana, an economist with Bank Danamon, also foresaw pressure on corporate and value added tax revenues continuing in 2020, but he believed the government would avoid letting the budget deficit become too stretched.
Indonesia has a law that limits the government's budget deficit at a maximum of 3% of GDP in a fiscal year. - Reuters
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