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Grim, Dim and Dire of State Economic Budget of Indonesia New Government 2015


Ronnie Higuchi Rusli

.World macroeconomic condition dictated the state of Indonesia economic budget of 2015, if not other than political one in dealing with legislative of different camp. Considering The Fed tapering policy, like it or not have significant impact on domestic economic agenda.

The US government and Saudi Kingdom had reach an unspoken despicable agreement to flood oil in the market on discount, in particular for the Asia market. Fears of competition have put big strain within the OPEC organization, as oil price is set to draw down to US$80/barrel or even lower from the recent pricing above one hundred per barrel

Saudi Arabia have the capability of producing 15 millions barrel/day for several months to dilute the current price as well as the US have crank up production capacity up to 8.9 million barrel. This is all the pressure put forward to depress others producing countries like Russia as well as OPEC member like Iran as well as Iraq and Vennezuela. To what extent that the price will affect the world economy is still uncertain yet.

The aim is to depress the oil market is certaintly have an impact to other oil related products such as LNG and Coal as a source of alternative energy other than oil, as well as minerals related ranging from Gold to Copper. It is not imperative to say that oil could go down to US$60/barrel or even lower, down to US$50/barrel as oil have become political weapon to depress country income.

Other driving force as a plausible could happened, like the fall of NY stock index down by 20-30% which directly will affect Asia market as well, and Indonesia in particular. The year of 2015, Indonesia have a new set of government in placed and on working, which is rather than a continual policy of the previous government, but rather a new program implementation of new policy.

The state budget of 2015 have been set by the late government, that need to be adjusted as well as to be discussed with the new member of legislative for approval, perhaps for a significant change. Several nonsense assumption of the state budget RAPBN 2015 have to be clear out or clarified base on an assumption; inflation 4.4%. central bank rate (BI) 6.2%, exchange rate Rp 11,900 per US$ and oil price base onUS$105/barrel.

The state budget of 2015 consist of debt payment at Rp 154 trillion (Rp12,200 to US$ 1.0), subsidized payment Rp 433.5 trillion (including non energy subsidized of Rp 70 trillion). All is calculated based on oil price assumption of US$105/barrel. Non tax revenue (oil and gas plus mineral related income) stated at total Rp 388 trilion.

To be more precise and realistic, the most dedicated income for the state budget is derived from oil-gas and mineral related income to be discounted by 40% due to depress of oil (if oil goes down to US$60/barrel) and mineral market. This would give an income of 40% out of Rp 206 trillion (the current 2015 budgeting) or Rp 123.6 trillion.

Income from mineral related is assumed to be deprressed by 30% or Rp 17 trillion which make total oil-gas and mineral income at Rp 141 trillion. Income derived from SOE (BUMN) is at steady Rp 41 trillion, which make the total non tax derived income down to Rp 182 trillion. Other income non taxable is Rp 113 trillion which make a total non tax income at Rp 295 trillion.

Assuming no change in govermnemt income tax, and no tax draw down (due to depressed market) and taxable income remain at Rp 1,371 trillion + non-tax income (oil-gas and minerals) Rp 295 trillion, the total government net income in 2015 is Rp 1,666 trillion. The government total expenditure is Rp 2,020 trillion (included all subsidized)

Thus the government deficit in year 2015 is (Rp2,020 trillion – Rp 1,666 trillion) at net deficit of Rp 354 trillion. The new government of Jokowi has no alternative other that borrowing domestically by tendering goverment bond and couple with foreign loan (Note: current total foreign debt is US$290 billion)

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