Central Government Spending Realization Drops 5.9 Percent In October 2023, Here Are Factors

JAKARTA - The Ministry of Finance noted that the realization of central government spending (BPP) decreased in October 2023 by IDR 1,572.2 trillion, meaning 70 percent of the total budget ceiling for 2023.

Minister of Finance Sri Mulyani Indrawati said that central government spending consisted of Ministry/Institutional expenditures (K/L) which reached Rp768.7 trillion or 76.8 percent of the ceiling. The realization of K/L spending decreased 1.94 percent when compared to the same period last year.

"Sufficient spending is seen from the implementation of the General Election, the construction of IKN, the completion of priority infrastructure, and various social assistance expenditures," he said at a press conference on our State Budget, Friday, November 25.

Meanwhile, non-K/L expenditures have been realized amounting to Rp803.6 trillion or 64.5 percent. This realization decreased by 14.15 percent when compared to the same period last year.

Meanwhile, the non-K/L expenditure is used to pay subsidies and compensation for fuel and electricity, the Pre-Employment Card program, fertilizer subsidies, and pension payments.

In more detail, non-K/L spending on subsidy payments and compensation in October 2023 realized Rp232.8 trillion, or decreased 17.82 percent when compared to the same period last year of Rp425.6 trillion. Then the realization of non-K/L expenditures was also channeled to the pre-work card program of Rp4.3 trillion for 1.2 million participants.

Sri Mulyani Indrawati said that the realization of BPP decreased by 5.9 percent compared to the same period last year of Rp. 1,671.4 trillion. This decline was mainly due to contracted non-K/L expenditures.

"Bulanja turun ini karena mayoritas belanja non K/L untuk subsidi dan kompensasi realisasinya lebih rendah daripada tahun lalu. Oleh karena itu, belanja KL tumbuh lemah," imbuhnya

On the same occasion, the Director General of Budget at the Ministry of Finance Isa Rachmatawari said that the contraction in non-K/L expenditure realization was due to lower payment of energy compensation to Pertamina than last year.

The component that experienced this decline was mainly because the payment for energy compensation to Pertamina was smaller than last year. So because the prices of oil and gas commodities have decreased from last year. So the pressure is also for Pertamina and PLN for liquidity and others is much lower than last year," he said.

Meanwhile, the realization of expenditure related to subsidies and energy compensation of Rp232.8 trillion consists of subsidy payments and electricity compensation of Rp3.4 trillion, subsidies and fuel compensation of around Rp97.2 trillion, and 3 kilograms of LPG subsidies of Rp52.2 trillion.

Isa said that in the compensation payment process, his party had made measurements regarding payments to PLN and Pertamina in accordance with the prices of oil and gas commodities.