Jakarta (Antara Bali) - Bank Indonesia Governor Agus Martowardojo said capital outflows could increase if the country's fiscal credibility is doubted.
From January to August, 2016 inflows of foreign capital to the country totaled Rp165 trillion, but outflows of Rp7 trillion were recorded in the last three days, following statement by the U.S. Central Bank governor signalling an increase in the Fed fund rate.
"We, that look strong, recorded an outflow of Rp7 trillion (in foreign capital), reducing the capital inflows to less than Rp160 trillion. The outflows could be larger if the fiscal health could not be maintained," Agus told the budget body of the House of Representatives in a working meeting here on Tuesday night.
Agus said basically, the condition of the country's economy is relatively goods as indicated by the size of the inflows of foreign capital and current account deficit that continues to be under control.
However, global attention was also drawn to the estimated shortfall of Rp219 trillion in state revenues this year, he said.
"Things look good , but our fiscal condition with estimated shortfall has drawn global attention," he said.
In the last two years state tax revenues have fallen short of target on shrinking prices of the country's main export commodities - oil and gas, coal and crude palm oil.
The trade and construction sectors were also under heavy pressures in 2016 as reflected in the slowdown in exports with growth rate only half of the rate recorded in 2015.
The global economic slowdown had its impact on the country's economy, Agus said.
In 2014 , there was a shortfall of Rp100 trillion in tax revenues , widening to Rp249 trillion in 2015 . In 2016, the shortfall is predicted to reach Rp219 trillion.
The government has to be more serious in addressing the shortfall in state tax revenues, he said, adding, Indonesia is a developing economy, "but it has been in the spotlight globally and its fundamentals are considered good."
Meanwhile Finance Minister Sri Mulyani Indrawati said she had continued to pressurize the Taxation Directorate General to work the harder to increase tax revenues.
"We could not afford to laze around when there is a shortfall of Rp219 trillion expected in tax revenue," Sri told the budgetary body during the working meeting. (WDY)
