Drop In Budget Deficit Links To Us Monetary Policy

Jakarta (Antara Bali) - Finance Minister Chatib Basri said the decline in the deficit of the draft 2015 state budget has to do with the US Federal Reserve's move to normalize its monetary policy.

"Why is it important? I have just returned from attending a G20 forum this afternoon. One message that I have received from it is like what I have often said, that is the risk of normalizing the  US policy is real," he said after attending a meeting with the House of Representatives (DPR) Budget Committee here on Monday night.    

Judging by the foreign media's responses to the Federal Repricing risk,  the best thing to do is reducing financing sources to lower the budget deficit, he said.

If Indonesia depends on great financing at the time of tight global liquidity, the situation will be more difficult, he said.

"If we have too much debts while the repricing risk is high, we will be overwhelmed. That's why we try to lower the deficit," he said.

However, the decline in the budget deficit will not be too significant now that it is for the government of President-elect Joko Widodo to decide it, he said.

Therefore, the finance minister expressed hope the new government will be able to lower the budget deficit further to anticipate the impact of the US monetary policy.

The government and the DPR budget committee have agreed to set the deficit in the draft 2015 state budget at Rp249.7 trillion or 2.21 percent of the national gross domestic product, down from the previous 2.32 percent.

Meanwhile, the total government spending is set at Rp2,017 trillion, comprising  Rp601 trillion  for ministries/government institutions,  Rp769.5 trillion  for non-ministerial agencies and Rp647 trillion for fund transfers,  plus domestic financing of Rp297.6 trillion and overseas financing of  Rp23.8 trillion.

State revenues are set at Rp1,793.6 trillion consisting of tax revenues worth Rp1,380 trillion, non-tax state revenues worth  Rp410 trillion and grants worth Rp3.3 trillion. (WDY)