President Jokowi: Economy projected to grow by 5.3% in 2017, global challenges remain

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Image credit: Cabinet Secretary (Setkab.go.id)

JAKARTA (TheInsiderStories) – President Joko Widodo said the government has set economic growth target of 5.3 percent in 2017, slightly higher than economic growth target set for this year at 5.2 percent, on grounds that the global economy will improve next year, despite few challenges.

“Nevertheless, we have to work hard in encountering uncertainty coming from the slow down of of economic growth in other developing countries, as well as the prospect of advanced economies which is not as expected yet,” the President said.

President made the statement when delivering introductory speech on Draft 2017 State Budget (RAPBN 2017) at a plenary meeting with the House of Representative (DPR) after midday. Early in the morning, the President delivered speech at the annual meeting of People’s Consultative Assembly (MPR) and State Address to commemorate the country’s 71st Independence Anniversary.

The Plenary Session of DPR for period 2016-2017 was headed by DPR Speaker Ade Komarudin and attended by almost all members of DPR.

The market was in positive mood. In the first session, the Jakarta Composite Index (JCI) was  up 44.686 points, or up 0.84 percent, at 5,365.247 points.

The President said the government realized myriad of challenges ahead, in particular remaining stagnant world economic growth, including Indonesia’s main trading partners, coupled with low commodity prices, which could undermine the country’s growth.

In addition,advanced countries are still struggling with their economic recovery process. “Therefore, there is still uncertainty in relation to financial policies,” he said.

The growth should also be supported by various economic policy reforms (Package I to XII) that have been issued by the government as a move to accelerate the economic development, improve investment climate and improve bureaucratic procedures including permits and so on. Hopefully, he said, the reforms will become stimulus for a fairer and event economic growth throughout Indonesia, in particular through a sustainable infrastructure development.

The President also revealed other macro economic assumptions for RAPBN 2017, including inflation at 4.0 percent, rupiah exchange rate at Rp13,300 per US dollar, three-month government treasury bonds (SPN) at 5.3 percent, oil price assumption at US$45 per barrel, oil and gas lifting at 1.93 million barrels of oil equivalent, comprises of 780,000 bopd and 1.15 barrels of oil equivalent per day (boepd) of gas.

“The macro economic assumptions reflect the current economic condition as well as taking into consideration the projected economic growth, therefore the State Budget is more realistic and credible,” he said.

So far this year, the government has managed to maintain steady economic growth. In the second quarter, the growth reached 5.18 percent, higher than previous quarter growth of 4.91 percent. The growth in second quarter was boosted by growth of agriculture, forestry, fishery as well as processing industry and trade. These sectors recorded higher growth compared to previous quarter.

Inflation rate has been kept at relative low. The year-to-date inflation was at 1.76 percent, compared to 3.21 percent in the same period last year.

The President said the RAPBN 2017 is developed based on three main policies. First, tax policy which can support the room for the economy to growth. In addition to source of revenues, the tax should also be used as incentive for the economy. Second, the expenditure policy will focus on improving the quality of productive expenditures as well as priority programs, with a focus on accelerating infrastructure development, social protection, the right-target subsidiaries and strengthening of decentralization of fiscal.

The third is financial policy to strengthen the country’s economic resilience and control risks by maintain deficit and debt ratio at acceptable level.

As for expenditure side, the government sets the following policies: Frist, increasing expenditure on productive sector — development of infrastructure and connectivity between regions. The development of infrastructure is needed to improve the quality of development and the creation of food sovereignty.

The government, he said, will raise expenditure for the development of the so-called ‘sea toll road program’ and people’s sea routes, development of public facilities and utilities, electricity, housing, health, clean water, toll road, railway and new rice paddy fields.

Second, improving efficiency and sharpening the procurement process to improve fiscal space. Third, improving the quality and effectiveness of social protection, through various programs including the quality of health and national security system (Jamkesnas) as well as rice assistance for the poor.

Fourth, strengthening the priority programs related with non-physical aspects, such as education, health, food security and energy, maritime and sea as well as tourism and industry. Fifth, extending subsidy to the right destinations as well as providing non-cash aids. Six, supporting efforts to uphold law as well as maintain stability and security.

With regard to the legal system, the government aims to uphold the law and maintain security and safety of the nation. The government will also pay more focus on combating narcotics and terrorism. “We will also continue to develop our defense strength in line with the posture of the country’s State Budget.

Expenditures & Revenues

The government sets revenues target in the RAPBN 2017 at Rp1,737.6 trillion. As much as Rp1,495.9 trillion will come from tax revenues. Non-tax revenues are set at Rp240.4 trillion, although the commodity prices are yet to recover.

The State expenditures are proposed at Rp2,070.5 trillion, comprises of central government expenditure at Rp1,310.4 trillion and allocation to regional governments at Rp760 trillion.

“Looking at various agenda and the target of the development that I have mentioned, the fiscal policy in 2017 will still be expansive to improve production capacity with RAPBN 2017 deficit at Rp332.8 trillion or 2.41 percent of GDP,” President Joko Widodo said.

“In general, the Budget policy for 2017 will be directed to develop and optimize creative and innovative policies as well as increasing financing access for SMEs, opening access to fund development and investment, support access to education program, provide cheap house for low income group, as well as improve the quality of the government’s investment plan and debt to GDP ratio to be at safe and controllable level,” the President said.

In closing, the President hopes the deliberation of the draft 2017  State Budget will be smooth and completed in time. I am confident with the trust and support of all people, the government will be able to work better, more effective in order to achieve the common goal,” he said.

DPR Speaker Ade Komarudin hopes the government, including local governments, improve the effectiveness of the realization of State Budget to support the economic growth.  (*)

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Source: The Insiderstories
President Jokowi: Economy projected to grow by 5.3% in 2017, global challenges remain

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