TEMPO.CO, Jakarta – Economist Faisal Basri has suggested the government to cut its spending in 2016 State Budget (APBN) to help in achieving the target of economic growth of 5.3 percent.

“There’s no other way, spending must be cut. However, it doesn’t mean that planned projects should be canceled,” he said in Jakarta, Wednesday evening, February 24, 2016.

The total state budget in 2016 State Budget is Rp2,095.7 trillion, an increase from 2015 Revised State Budget (APBNP) of Rp1,984.1 trillion.

Therefore, the lecturer of Economy and Business Faculty of University of Indonesia went on, SOEs must be encouraged to fund temselves, among others by issuing their own bonds.

“So Indonesian government won’t need to issue bonds,” he said.

As an example, he said, PT Pelabuhan Indonesia III (Persero) had done it before by issuing bonds worth Rp9 trillion-Rp10 trillion to fund seaport project.

In mid-2016, PT Angkasa Pura II (Persero) or AP II will also issue bonds worth Rp2 trillion to fund company capital expenditure in 2016 which is around Rp11 trillion.

“As a consequences, the project must be attractive; if not, the bonds will not be sold out,” said the economist.

He also added that the government can not rely on tax amnesty which bill is still being deliberated in the House of Representatives.

Asked about the economic growth of 5.3 percent targeted by the government, Basri is pesimistic that it could be achieved. Even after what he had suggested, he projected that the 2016 economic growth would be at a maximum of 5.2 percent.

“Economic growth of 2016 will be better than in 2015; even though it would be lower than the government’s target, it would still be higher than the IMF’s estimate,” said Basri.


Source: http://en.tempo.co/read/news/2016/02/25/056748115/Govt-Must-Cut-Spending-to-Reach-Targeted-Economic-Growth-Faisal