Institute of International Finance<\/a> (IIF) that Indonesia’s economic recovery has rallid since late August, as COVID-19 cases started to decline following a devastating spike in July.<\/p>\nThe government has raised its COVID-19 relief budget to respond to rising cases if infection. It’s previous 2021 budget deficit outlook was 5.82% of GDP.<\/p>\n
Indonesia’s budget deficit<\/h2>\n
Indonesia\u2019s President Joko Widodo on Monday proposed to parliament a 2,708.7 trillion rupiah ($188.30 billion) budget for next year, with a fiscal deficit equal to 4.85% of GDP, aimed at boosting an economic recovery from the pandemic.<\/p>\n
The president has set a gross domestic product growth target within a range of 5% to 5.5% next year, compared with this year\u2019s estimate of 3.7% to 4.5% growth.<\/p>\n
The economy shrunk by 2.1% last year. This is the first contraction since 1998 due to the reprecaussions of the COVID-19 pandemic.<\/p>\n
Sri Mulyani Indrawati had said that the new fiscal measures will increase next year’s tax revenue by around 139.3 trillion rupiah ($9.80 billion), taking the tax ratio of South-East Asia’s biggest economy to 9.22% of GDP, from 8.44% without the new law.<\/p>\n
However, some business groups and analysts have questioned the timing of the tax hikes, since the economic recovery from the pandemic seen as fragile.<\/p>\n
The law calls for the value-added tax (VAT) rate for sales of nearly all goods and services to be raised from 10% now to 11% next April and to 12% by 2025.<\/p>\n
It also scraps a planned corporate tax cut and introduces a higher income tax rate for wealthy individuals, a new carbon tax and a new tax amnesty programme.<\/p>\n
All political parties but one in parliament approved the legislation.<\/p>\n
“Through this law we want to optimise government revenue, create a fairer tax system… as well as expand our tax base in this globalisation era when the digital technology is very dominant,” Sri Mulyani said.<\/p>\n
The new tax measures would add less than 0.5 percentage point to headline inflation and have little impact on economic growth, the minister said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Indonesia’s fiscal budget deficit may decrease to less than 5.4% of GDP this year, due to the commodity boom and economic recovery following its deadliest COVID-19 wave, its finance minister Sri Mulyani Indrawati said on Monday. The minister said in a virtual forum with the Institute of International Finance (IIF) that Indonesia’s economic recovery has […]<\/p>\n","protected":false},"author":4,"featured_media":210689,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[278],"class_list":["post-210688","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-featured"],"yoast_head":"\n
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