The Government Designs The 2023 State Budget Short Of IDR 598 Trillion But Is Said To Be Healthy, How Come?

JAKARTA - The government through President Joko Widodo (Jokowi) has officially submitted the 2023 State Budget Bill (RUU) along with a Financial Note to the DPR in the MPR Annual Session some time ago.

In his speech, the Head of State explained that the government has budgeted state expenditures of Rp. 3,041.7 trillion, which includes central government expenditures of Rp. 2,230 trillion and transfers to the regions of Rp. 811.7 trillion.

Meanwhile, for the income sector, it is estimated that it will be able to reap the figure of Rp. 2,443.6 trillion. This means that the amount of spending that is greater than income makes the APBN deficit perch in the position of Rp. 598.2 trillion or equivalent to 2.85 percent of gross domestic product (GDP).

"The 2023 budget deficit is the first year that we will return to a maximum deficit of 3 percent of GDP," said President Jokowi as quoted on Monday, August 22.

So, why does the government design state finances to be "big pegs than pillars"?

As a developing country, the need for development budgets tends to be higher than the revenue sector. Meanwhile, the difference is met through the financing sector.

The budget deficit of 2.85 percent of GDP next year is the government's first restructuring since 2020.

As is known, in Law Number 2 of 2020 concerning State Finances it is stated that the government may widen the deficit space above 3 percent of GDP until 2022 in response to the COVID-19 pandemic. Then, starting in 2023, the deficit provisions must return to the initial reference, which is below 3 percent of gross domestic product as a step to improve state finances.

According to VOI records, the realization of the APBN deficit in 2020 is Rp. 947.70 trillion, equivalent to 6.14 percent of GDP.

Then, for the period throughout 2021, the government plans a deficit of IDR 1,006,4 trillion or 5.7 percent of GDP. However, the realization until the close of the year was recorded at a lower value of IDR 783.7 trillion or 4.65 percent of GDP.

"The commitment to maintaining fiscal sustainability is carried out so that the level of debt risk is always within safe limits through financial market deepening," said President Jokowi.

Meanwhile, for this year, the deficit is pegged at IDR 840.2 trillion or 4.50 percent of the DPB. However, thanks to the steady performance in terms of commodities and the recovery of the national economy, as of July 2022, the state budget posture will still have a surplus of Rp106.1 trillion.

The government is also optimistic that the 2022 APBN deficit can be lower than the initial target of 4.50 percent of GDP.

"The deficit will be financed by utilizing safe and managed financing sources, while maintaining fiscal sustainability," said President Jokowi.