Economists Estimate 2024 State Budget Deficit At 2.2 Percent

JAKARTA - Bank Permata economist Josua Pardede estimates that the 2024 State Revenue and Expenditure Budget (APBN) will experience a deficit of 2.2 percent of gross domestic product (GDP) in 2024.

"Fiscal deficiency is also expected to remain in the range of 2.2 percent of GDP by the end of this year," he told VOI, Friday, June 28.

Josua conveyed this based on the temporary realization of the 2024 State Budget until May 2024, there was a deficit of IDR 21.8 trillion or 0.1 percent of gross domestic product (GDP) compared to May 2023 where the State Budget recorded a surplus of 0.97 percent of GDP.

According to Josua, the fiscal deficit recorded in May 2024 was influenced by a decrease in tax revenues which fell 8.4 percent year on year (yoy) and PNBP also fell by about 3.3 percent (yoy) from the position in May 2023.

"The decrease in tax revenues is influenced by the normalization of export commodity prices, especially mining products, so it is also reflected in the PPh of mining sector agencies that have contracted," he explained.

Meanwhile, Josua said state spending tends to increase by around 14 percent (yoy) from the realization of the same period in 2023.

According to Josua, spending on Ministries/Institutions (K/L) tends to be influenced by the absorption of spending related to election activities and social assistance in order to mitigate the impact of El Nino, especially on low-income communities.

Josua conveyed that accelerated spending generally provides indications that the economy tends to be solid, especially in order to support public consumption.

"It is proven that in the first quarter of 2024, economic growth was recorded at 5.11 percent and it is estimated that this positive trend will continue in the second quarter of 2024," he said.

In the future, Josua said that taking into account that the source of economic growth, especially from export components, is expected to tend to be limited, especially in the midst of global economic uncertainty conditions.

Therefore, according to Josua, government spending needs to be encouraged to increase its productivity which can accelerate public consumption and maintain an investment climate, especially infrastructure projects (related to capital expenditures), which of course have a high multiplier effect on the economy.

"Thus, economic growth is expected to remain well maintained in the 5 percent kisar," he concluded.