ADB estimates Indonesia’s revenue to exceed target in 2022

Jakarta (Indonesia Window) – Indonesia’s state revenue in 2022 would again exceed its target as last year recorded at 2,031 trillion rupiahs (some 141.4 billion U.S. dollars) or 114.9 percent of the 2021 state budget target of 1,743.6 trillion rupiahs (some 121.3 billion U.S. dollars), according to an estimate by a senior economist at the Asian Development Bank (ADB) Henry Ma.

This year’s state revenue in the State Revenue and Expenditure Budget is targeted at 1,846.1 trillion rupiahs (about 128.5 billion dollars).

“The economic recovery continues to strengthen in Indonesia this year,” Ma said at a media briefing monitored in Jakarta, Wednesday (Apr. 6).

According to him, there are three reasons underlying the estimation of the state income, namely the increase in economic activities in the country. This can be seen from the increasing number of indicators of consumer activities in the first quarter of 2022, such as the consumer confidence index, retail sales index, and so on.

The second reason is that there are several changes in tax policy that have been implemented this year.

Furthermore, Ma explained that the third reason is that although there is an increase in global wheat and crude oil prices which have the potential to raise inflation, the increase in coal, palm oil and nickel prices would provide higher income for Indonesia.

“Thus, the impact of the commodity price shock on fiscal conditions, which should have been negative, has become modest or simple,” he explained.

However, he estimates inflation will increase to 3.6 percent this year due to rising food and fuel prices which put pressure on the government’s subsidy policy.

In terms of the monetary policy, Bank Indonesia (BI) this year is not expected to be very supportive because the central bank will increase its reserve requirements, while burden sharing with the government will only be carried out until the end of this year.

Reporting by Indonesia Window