Esther Samboh, Jakarta – The government again failed to meet its spending target in 2011, with expenditures for the energy subsidy beating productive capital and goods expenditures – a trend that might undermine economic growth if continued this year.

The Finance Ministry announced last week that the 2011 state budget left a lower-than-expected Rp 90.1 trillion (US$9.85 billion) deficit, or 1.27 percent of the country's gross domestic product (GDP), as the government only spent 97.6 percent of its overall spending target.

Spending for the energy subsidy surpassed the year-end intention of Rp 255.6 trillion, or 130.9 percent of the official target. That compares with spending for capital and goods of 82.2 percent and 84.7 percent, respectively, at Rp 115.9 trillion and Rp 121 trillion.

One year earlier, the energy subsidy stood at 140.0 trillion, or 97.2 percent of the target, while capital and goods expenditures reached 84.5 and 86.7 percent, at 80.3 trillion and 97.6 trillion.

"Quality spending is a priority for 2012," Finance Minister Agus Martowardojo told a press briefing at his office, adding that boosting infrastructure spending would be the government's number one agenda to spur economic growth, create new jobs and help alleviate poverty.

So that Indonesia's 6.7 percent economic growth target could be achieved, both the central bank and other economists have warned the government to accelerate spending this year, especially for prioritized initiatives, in order to offset an expected slowdown in export growth against the backdrop of an ongoing global economic crisis.

Capital spending plans have been increased by 19.3 percent this year compared to last, totaling Rp 168.1 trillion for airports, railways, roads, bridges and dams, in addition to the existing infrastructure plans to interconnect thousands of islands throughout the archipelago.

Subsidy spending was cut by almost 12 percent to Rp 208.9 trillion for 2012, compared with Rp 237.2 trillion in 2011. The government has planned to limit the fuel subsidy by restricting private cars from consuming subsidized fuel starting in Java and Bali in April, followed by other major islands through 2014.

"I am concerned about overspending in the subsidy. The 2012 state budget may likely end up the same, with the fuel subsidy predicted to reach Rp 140 trillion, or 110 percent of the state budget target," said Gadjah Mada University (UGM) Center of Economic and Public Policy Research director Tony Prasetiantono.

Tony thought the government's fuel subsidy limitation plan was counterproductive compared with the more simpler method of keeping the subsidy for those in need and raising subsidized fuel prices for private cars.

"As for the traditionally slow budget disbursement, I hope the unspent budget in 2011 could be used to boost infrastructure projects. The Finance Ministry should intensively watch the 2012 budget disbursement from early this year, especially for capital spending," he added. Deputy Finance Minister Anny Ratnawati shared the same view that "quality spending is needed, so we push for disbursement in the first quarter, which previously was the time to prepare for procurement".

Of the 10 ministries and state bodies that are the largest recipients of state budget allocations, only the National Police and Defense Ministry absorbed 100 percent of their budget.