State Budget Target of 2020 is Again Revised, Deficit Sets to 6,27%

JAKARTA. The government will again proposes changes to the 2020 State Budget (APBN). Previously, the revised state budget had been made by the government by issuing Government Regulation in Lieu of Law (Perppu) number 1 of 2020 which was followed by issuing Presidential Regulation (Perpres) number 54 of 2020 on 3 April, 2020.

However, since the Perpres was issued two months ago, the government considered that the State Budget amendment target that had been made was no longer relevant for several reasons. As quoting from Bisnis.com, the government estimates, the state revenue target will contract by 13.6% to IDR 1,691.6 trillion.

The decline was due to government policy which provide tax incentives reaching IDR 123.01 trillion. These incentives include reduction of Corporate Income Tax (CIT), Income Tax Article (ITA) 21 borne by the government (DTP), MSMEs Final Income Tax borne by the government, exemption of ITA 22 on import, reduction of ITA 25 by 30% and  the acceleration of VAT refunds.

In addition, there was an additional fiscal stimulus in the form of MSME's interest subsidy of IDR 34.2 trillion, electricity tariff discount for 6 months reached IDR 3.5 trillion, additional social assistance extended to December reached IDR 19.62 trillion, and there were stimulus reserves of IDR 60 trillion. Meanwhile, on the state expenditure side, the government estimates it will rise to IDR 1,720.1 trillion.

Read: Tariff Reduction of ITA 25 is Effective As Of April 2020

With the changes in the state revenue and expenditure budget allocation, the APBN deficit is expected to widen to 6.27% of Gross Domestic Product (GDP). Previously, both in Perppu number 1 of 2020 and Perpres number 54 of 2020, the deficit was expected to widen to 5.01% of GDP.

For this reason, the government plans to issue a new Perpres to replace Perpres number 54 of 2020. As cited in Kontan.co.id, the regulation will be issued immediately and submitted to the House of Representatives (DPR) to be discussed together, including the National Economic Recovery (PEN) program that will be conducted by the government.