Jakarta – Indonesia reported a near flat income in January-October compared with the corresponding period a year earlier on Monday, as revenues from some taxes shrank, underlining the government's struggle to keep the budget deficit in check.
Markets have been putting the government's budget under scrutiny after reports of sluggish tax collections that reflected weak company profits and slowing economic growth.
Officials estimate this year's budget deficit at 2%-2.2% of gross domestic product (GDP) compared with a previously forecast 1.93% and an original plan of 1.84%.
"Our assumption is in the higher end of that deficit range," Suahasil Nazara, vice finance minister, told a news conference.
Just 70% of the government's revenue target was met in the first 10 months of 2019, or 1,509 trillion rupiah ($107.51 million), representing 1.2% growth from the same period of 2018, data from the finance ministry showed.
The government has targeted to collect 11.4% more in 2019 from what it gathered the previous year, assuming economic growth of 5.3%. However, officials say the likely GDP growth rate this year is 5.1%, down from 5.2% last year.
Corporate tax payments grew just 2.2%, with those paid by firms in manufacturing, mining, construction and the oil and gas industry contracting. Value-added tax collection was down 4.2% in the period.
Meanwhile, export tax payments plunged 50%, far sharper than the 7.8% on-year drop in export value within the same time frame.
A rare bright spot on the revenue side was a nearly 300% increase in export tax payments from nickel ore shipments, though this amounted to just around 240 billion rupiah.
In September, the government announced it would bring forward a nickel ore export ban to January 2020 from 2022, which triggered a jump in shipments amid rising prices.
Officials declined to give an estimate for the tax shortfall in 2019.
The government had disbursed 73% of its budget in January-October, totalling 1,798 trillion rupiah, and it would continue to support priority spending, Askolani, the finance ministry's director general of budgeting, said.
There may be some "efficiency measures" to cut spending allocations that are not urgent, Askolani, who goes by one name, added without elaborating.
Indonesia has raised 401.7 trillion rupiah from bond auctions, excluding short-term Treasury bills and buybacks, in anticipation of the wider budget deficit.
Three more rupiah-denominated bond auctions are still scheduled for this year, the vice finance minister said. "We will use any instrument to meet our financing needs until the end of the year, considering the right time and the right prices," he said. ($1 = 14,036.0000 rupiah)
[Reporting by Maikel Jefriando Writing by Gayatri Suroyo Editing by Jacqueline Wong.]