REPUBLIKA.CO.ID, JAKARTA -- Leading law maker Mukhammad Misbakhun supported the government in bringing to reality a credible state budget for 2019 to maintain the national economic stability. He said credibility is very important to maintain the market confidence in the state budget proposed by the government to be discussed with the House of Representatives.
He was commenting on the draft state budget for 2019 and financial note presented by President Joko Widodo (Jokowi) at a House plenary session on the eve of the National Independence Day commemoration of on Thursday. The draft state budget sets a number of macro economic targets including economic growth at 5.3 percent, inflation at 3.5 percent, rupiah exchange rateat 14,400 per U.S. dollar, Indonesian crude price (ICP) at U.S.$70 per barrel, oil lifting at 750,000 barrels/day, 3-month treasury securities interest averaging 5.3 percent, gas lifting at 1,250,000 barrel oil equivalent/day.
A U.S. dollar was valued at Rp14,400 - higher than the target of Rp13,400 set in the 2018 state budget, and the budget deficit was set at 1.84 percent of the country's Gross Domestic Product (GDP)- narrower than the target of 2.21 percent set for 2018.
"The draft state budget shows that the government is quite conservative despite an increase in the volume. I see it as a government's commitment to continuing pro-people programs," Misbakhun, who also known as an economic observer, said here on Sunday.
The lawmaker of the Commission XI said the government has to forestall the impact of economic turbulence in Turkey, trade war between world's economic giants - China and the United States, and global uncertainties. He said the seriousness of the government to continue with its infrastructure development program by allocating Rp420 trillion for program in 2019 deserves appreciation.
He said there was wider fiscal room for the government to carry on with infrastructure development. The government seems set to carry out and fully complete its massive infrastructure program during its five year term under Jokowi ending next year, he said.
Misbakhun, however, said he appreciated the government for not pruning budget for pro-people programs, despite high prudence reflected by the targets set in the proposed state budget. The government even more serious in carrying on with its pro-people programs which would be helpful in improving the economic welfare of the people, he said.
Opposition has widely criticized the Government's infrastructure program as too ambitious forcing the government to use huge foreign debts. Through the proposed state budget the government wants to increase fund aid for education such as for what are called BOS, Bidikmisi scholarship and LPDP, he said.
Through the programs the government showed its seriousness to increase the peoploe's dignity and human development index and at the same time reducing poverty, he added. "It is very obvious the continuity of pro-people direction of the government policy," he said.
Meanwhile, the Indonesian Employers Association (Apindo) said the government's economic team has to work hard to meet the targets set in the draft state budget for 2019. Apindo chairman Hariyadi Sukamdani said here on Thursday, he appreciated the macro economic targets set in calculating the draft state budget, which he described as quite good.
However, in order to meet the targets such as for tax revenues and non tax income, the economic team of the government has to work harder, Hariyadi said. "Realization of the tax and non tax revenues could be off target if the cabinet did not work well," he said.
Jokowi on Thursday proposed to the House of Representatives the draft state budget for 2019 with a deficit of 1.84 percent of the country's Gross Domestic Product (GDP). The proportional expansive fiscal policy is to maintain fiscal sustainability.
"It is reflected by the narrowing state budget deficit target from 2.59 percent in 2015, to 2.12 percent in 2018 and to 1.84 percent in 2019," Jokowi said.
Improvement in the fiscal policy also is reflected by the primary balance deficit that narrowed from Rp142.5 trillion in 2015 to Rp64.8 trillion in 2018 and is expected to continue to narrow to Rp21.7 trillion in 2019. "With the trend in the fiscal policy, we are expected to be able to achieve a condition of level in primary balance or surplus in the near future," the president said.
He pledged that the financing of the state budget in 2019 would be accountable as the budget deficit and the ratio of debts to GDP will remain under control in a safe limit in line with the Law No. 17 of 2003 on state finance.
Prudence would also be closely observed in debt management, to reduce risks and cost, he went on to say, adding the debt fund would be used for productive sectors such as for education, health, infrastructure development, social security and area development.
"In 2019, the government will continue to adopt measured expansive fiscal policy to sustain economic growth to give justice for all Indonesia people," he said.