Indonesia’s economy will grow by 5 percent next year, while the budget deficit is predicted to be 1.6 percent of GDP, down from this year’s 2.5 percent, according to a draft budget unveiled yesterday.
Indonesian President Susilo Bambang Yudhoyono told the House of Representatives that next year’s budget deficit was anticipated to be 98 trillion rupiah (US$9.9 billion), or 1.6 percent of GDP, as the government continues with fiscal stimulus plans to help the economy recover.
Revenues would increase by 38.8 trillion rupiah to 911.5 trillion rupiah from the current fiscal year ending Dec. 31, while expenditures were forecast at 1,009.5 trillion rupiah, up 3.8 trillion rupiah.
“The 1.6 percent GDP deficit in the bill of the state budget 2010 is appropriate for our economy, which remains in the recovery stage from the impact of the global crisis,” Yudhoyono said.
The deficit was adjusted to 2.5 percent of GDP in the revised 2009 budget.
While the global economy is predicted to begin its recovery next year, Yudhoyono warned this did not mean Indonesia would be free from challenges.
“Indonesia certainly cannot disengage itself from the impact of the downturn of global economic activities,” Yudhoyono said. “Nevertheless, due to rapid and appropriate action, Indonesia was relatively speaking far better off than other countries.”
The government proposed to spend 61.2 trillion rupiah next year to boost the economy, slightly down from the 70 trillion rupiah stimulus package this year.
Yudhoyono said the economy would grow 5 percent “or even more” next year and “even faster” in subsequent years.
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