4-4-2024 (JAKARTA) Indonesia’s fiscal deficit for the year 2024 is expected to widen beyond the initial estimate of 2.29 percent of GDP, as the government grapples with escalating costs associated with social assistance and fertilizer subsidies, according to Chief Economic Minister Airlangga Hartarto.
In an interview with Reuters on Thursday, Hartarto revealed that while the government aims to manage the fiscal deficit below the legally mandated ceiling of 3 percent of gross domestic product (GDP), it is likely to surpass the previous projection, potentially reaching as high as 2.8 percent.
“It will not be far (from 2.8 percent). Maximum is 2.8 percent, but the outcome may be 2.6 percent to 2.7 percent,” Hartarto stated, attributing the upward revision to increased spending on food-related programs and subsidies within the agricultural sector, including fertilizer subsidies.
Bolstering Social Assistance and Agricultural Productivity
The minister’s comments shed light on the government’s priorities for the year, with a focus on alleviating the burden of rising food prices on the nation’s underprivileged populace and bolstering agricultural productivity.
Indonesia’s original allocation for social assistance in 2024 stood at 496 trillion rupiah ($31.22 billion), marking a 4.2 percent increase from the previous year. These funds are earmarked for programs such as rice and cash handouts, aimed at helping the poor cope with soaring food costs.
Compounding the fiscal pressures is the extended dry season brought about by the El Niño weather pattern in 2023, which has driven up food prices and necessitated additional support measures.
Furthermore, the government has significantly increased the allocation of subsidies for fertilizers, more than doubling the initial budget to cover 9.5 million metric tons, a move expected to cost the state coffers around 50 trillion rupiah. This decision underscores the administration’s commitment to boosting domestic food production and achieving self-sufficiency.
