Indonesia: Continuing to Work in Sustaining Economic Growth Momentum

The Indonesian government has reported the positive performance of the State Revenue and Expenditure Budget (APBN) until the end of July 2023. The report reveals that the APBN remains stable despite facing global economic uncertainties.

Global economic uncertainties, including economic fluctuations and changes in global market conditions, have prompted the government to take strategic measures to protect the population from negative impacts. The global economic slowdown in the latter half of 2023 continues, influenced by geopolitical issues, manufacturing contractions, financial sector volatility, and commodity price weaknesses.

However, Indonesia continues to experience growth acceleration in the manufacturing sector. While the Manufacturing Purchasing Managers’ Index (PMI) remains contracted in many countries such as the US, Canada, Brazil, Europe, and others, Indonesia’s Manufacturing PMI continues to grow and remains in the expansion zone.

Finance Minister Sri Mulyani Indrawati stated that the APBN has successfully recorded a surplus of Rp153.5 trillion until July 2023, equivalent to 0.72 percent of the Gross Domestic Product (GDP). This achievement was driven by stronger state revenue compared to state expenditure. State revenue reached Rp1,614.8 trillion, while state expenditure was only Rp1,461.2 trillion.

Sri Mulyani explained that tax revenue, customs and excise revenue, as well as Non-Tax State Revenue (PNBP) also experienced positive growth. Tax revenue reached Rp1,109.10 trillion or 64.56 percent of the target, while customs and excise revenue reached Rp149.83 trillion or 49.4 percent of the target. Additionally, PNBP reached Rp355.5 trillion or 80.6 percent of the set target.

Indonesia’s domestic economy continues to show positive signs, with economic growth exceeding 5 percent for seven consecutive quarters. Effective fiscal policies have played a crucial role in accelerating economic recovery and improving equitable distribution. Economic growth in some regions, such as Sulawesi, Kalimantan, and Maluku-Papua, even surpasses the national growth rate.

The performance of the domestic financial market remains solid despite a trend of decreasing yields in Domestic Government Securities (SBN) since late July 2023. The Indonesian Rupiah continues to appreciate, while the US Dollar index weakens. Foreign capital inflow remains positive in both the SBN and stock markets.

The Indonesian government is optimistic that the positive performance of the APBN and stable economic growth will help maintain economic resilience amidst global uncertainty. The APBN is expected to continue to serve as a “shock absorber” to safeguard the welfare of the population.