1 PROGRESS OF MACROECONOMICS ASSUMPTIONS AND ...

PROGRESS OF MACROECONOMICS ASSUMPTIONS AND BUDGETREALIZATIONTHE 1 st SEMESTER OF 2009I. Macroeconomics Assumptions1. Economic GrowthIn the Law on 2009 Budget, economic growth is target at 6.0%. In the 2009 FiscalStimulus Document, the target of economic growth is revised down to 4.5%, and in the2009 Proposed Revised Budget the economic growth target is revised down again to4.3%.In the Q-I of 2009, economic growth has reached 4.4%, while in the Q-II economicgrowth is projected to be around 3.7%. Thus, in the 2009 first semester economicgrowth is estimated at 4.1%; lower than the rate of economic growth in first semesterof 2008 that reached 6.34%.The sources of economic growth come from the government consumption, the publicconsumption, and investment, which are estimated to grow at 16.4%, 5.7% and 7.6%.Meanwhile, export and import are projected to have negative growth of minus 14.4%and minus 20.4%.765Graph 1Economic Growth (y-0-y), 1 st Semester of 2008 - 2009%4326.25 6.42 6.344.4*)3.7*)4.12008200910*) ProjectionQI QII Sem I2. InflationIn the Law on 2009 Budget, the inflation rate is estimate at 6.2%, and adjusted to be6.0% in 2009 Fiscal Stimulus Document, and become 5.0% in the 2009 ProposedRevised Budget.Until the first semester of 2009, the cumulative inflation rate (m-t-m) and annualinflation rate (y-o-y) has reached 0.11% and 3.65%. Thus, it is lower than inflation rateat the same period in 2008, i.e. 2.46% (m-t-m) and 11.03% (y-o-y).1

The decrease of the inflation rate is caused by the drop in oil prices, reduction insubsidy fuel prices (diesel and premium), the availability of food supply, and effectivedistribution of goods and services.14.0%12.0%2.46%Graph 2CPI Inflation Rate, 2008 - 20092.5%2.0%10.0%8.0%6.0%4.0%11.03%3.65%1.5%1.0%0.5%2.0%0.0%0.0%-0.5%Inflation (y-o-y)Inflation (m-t-m)3. Exchange RateIn the Law on 2009 Budget, rupiah exchange rate is estimate at Rp9.400/US$, thenadjusted in the 2009 Fiscal Stimulus Document to be Rp11.000/US$, and revised toRp10.600/US$ in the 2009 Proposed Revised Budget.In the first semester of 2009, rupiah reached an average of Rp11.082/US$, or lowerthan its position in the first semester of 2008 that reached Rp9.259/US$.This occurrence is influenced by some external factors, such as increased losses offinancial institutions/corporations and stimulus polemics in the United States andalso by internal factors such as the concerned in adequacy of foreign exchangereserves and foreign debt payment obligation, which lead to rupiah depreciation.13,000Graph 3Exchange Rate Rupiah to US Dollar, 2008 - 2009Exchange Rate (Rp/US$)12,00011,00010,0009,0002008 1 st Sem:Rp9,259.38,000Jan 08FebMarAprMayJunJul2009 1 st Sem:Rp11,082.3AugSepOctNovDecJan 09FebMarAprMayJun2

4. 3-Month Bank of Indonesia Certificate (SBI) Interest RateIn the Law on 2009 Budget and also in the 2009 Fiscal Stimulus Document as well asin the 2009 Proposed Revised Budget, 3-month SBI interest rate is estimate at 7.5%.During the first semester of 2009 average realization 3-months SBI reached 8.5%,which means higher than its realization in the first semester of 2008 that reached anaverage of 8.2%.The increase in average 3-month SBI is meant to attract investors to put their shortterm investment in Indonesia because Indonesian economic condition still remainconducive in the middle of global crisis.12Graph 43-Month Bank of Indonesia Certificate (SBI) Interest Rate, 2008 - 200911.031111.4911.19SBI (%)109877.837.97 8.03 8.042008 1 st Sem:8.2%8.349.009.579.739.8410.399.308.688.282009 1 st Sem:8.5%7.507.086Jan 08FebMarAprMayJunJulAugSepOctNovDecJan 09FebMarAprMayJun5. Indonesian Crude Oil Price (ICP)In the Law on 2009 Budget, Indonesian crude oil price (ICP) is estimate at US$80.0per barrel. In the 2009 Fiscal Stimulus Document, the assumption is adjusted toUS$45.0 per barrel, but then readjusted to US$61.0 per barrel in the 2009 ProposedRevised Budget.The realization of ICP in the first semester of 2009 reached US$51.6 per barrel, ordecrease from its realization in first semester of 2008 that reached at US$109.4 perbarrel.3

160Grap 5Indonesian Crude Oil Price (ICP), 2008 - 2009140(us$/barel)12010080604020132.36 134.96124.67115.56103.11 109.30 Sem I92.09 94.64 99.062008:109.370.6668.9157.8649.3238.45 41.89 43.10 46.95 50.62 Sem I2009:51.560Jan Peb Mar Apr May June July Agust Sept. Oct. Nop. Dec. Jan. Peb Mar Apr. May June2008 20096. Oil LiftingIn the Law on 2009 Budget and 2009 Proposed Revised Budget, oil lifting is estimateat 0.960 billion per barrel.The realization of oil lifting in the first semester (December 2008 - May 2009)reached 0.957 million barrels per day, which means higher than the realization of the2008 first semester that reached 0.846 million barrels per day. The increase in oillifting was due to the new oil wells start to produce and revitalization of the old wellsprogram.Thousand barel/dayGraph 6Lifting, 2008 - 20091.1001.0501.000950900850800750700823 829981948910Sem I 2008 :846 thousandbarel/day1.037863948 9509199151.048Sem I 2009 :957 thousandbarel/day896749956896855JanPebr.Mar.Apr.MeiJuniJuliAgust.Sept.Okt.Nop.Des.Jan.Pebr.Mar.Apr.MeiNote: average lifting on Sem I fromDecember up to May2008 20094

II. BUDGET REALIZATION1. Revenues and GrantsIn the Law on 2009 Budget, revenues and grants are estimate at Rp985.7 trillion. Thetarget is revised to Rp848.6 trillion in the 2009 Fiscal Stimulus Document, andbecome Rp872.6 trillion in the 2009 Proposed Revised Budget.In the first semester of 2009, the realization of revenues and grants reached Rp367.2trillion (37.3% of the target in the 2009 Budget or 42.1% of the target in the ProposedRevised Budget 2009). The number is decreased by 5.4% in comparison withrealization in 2008 first semester that reached 47.5% from its Revised Budget.The realization of revenues and grants consist of the realization of domestic revenuesRp367.0 trillion (37.3% from the target in 2009 Budget or 42.1% from the target in the2009 Proposed Revised Budget), and the realization of grant Rp0.2 trillion (21.7 %from the target in 2009 Budget or 20.5% from the target in the 2009 ProposedRevised Budget).The realization of domestic revenues consist of the realization of tax revenuesRp288.5 trillion (39.8% from the target in 2009 Budget or 44.2% from the target inthe 2009 Proposed Revised Budget) and realization of nontax revenues Rp78.5 trillion(30.3% from the target in 2009 Budget or 35.8% from the target in the 2009 ProposedRevised Budget).The realization of tax revenues in 2009 first semester consist of income taxes Rp163.8trillion (56.8%), VAT Rp81.0 trillion (28.1%), excise Rp26.3 trillion (9.1%), the landand building taxes and dutiable on land and building transfers Rp6.9 trillion (2.4%),international trade taxes Rp9.0 trillion (3.1%), and other taxes Rp1, 5 trillion (0.5%).Meanwhile, the realization of nontax revenues in the 2009 first semester come fromthe natural resources revenue Rp47.6 trillion (60.6%), other nontax revenues Rp26, 3trillion (33.5%), government share from SOE’s profit Rp3.5 trillion (4.5%), and publicservice agency revenue (BLU revenue) Rp1.1 trillion (1.4%).trillion Rp100.090.080.070.060.050.040.030.020.010.00.010.045.4Graph 7Revenue and Grant, January- June 2009Grant Nontax Revenue Tax Revenue12.337.97.249.90.18.064.10.118.442.50.122.771.6Jan Peb Mar Apr May June5

70.060.0Graph 8Tax Revenue Realization, January- June 20091.43.3trillion Rp50.040.030.020.01.44.414.45.21.34.611.03.61.55.813.73.013.34.840.31.44.71.43.514.613.84.8 6.010.019.216.524.917.7 17.70.0Jan Peb Mar Apr May JunNonoil & gas Inc. TaxOil & gas Inc. TaxVATLand & Building TaxDuties on Land & Building Trnsf.ExciseGraph 9Nontax Revenue Realization, January - June 200970.060.050.013.3trilion Rp40.030.020.010.014.411.05.23.619.2 16.513.73.024.94.840.30.513.814.64.8 6.017.7 17.70.0Jan Peb Mar Apr May JunOil & gas natural resourcesProfit from SOEBLUNonoil & gas natural resourcesOther nontax revenue2. Government ExpendituresIn the Law on 2009 Budget, government expenditures is estimate at Rp1.037.1 trillion,then is adjusted to Rp988.1 trillion in the 2009 Fiscal Stimulus Document, andbecome Rp1.005.7 trillion in the 2009 Proposed Revised Budget.Until the first semester of 2009, the realization of the government expendituresreached Rp372.9 trillion, which means 36.0% of its 2009 Budget or 37.1% of its 2009Proposed Revised Budget. This means 2.55% higher in comparison with its realizationof 2008 first semester that reached 36.7% of its Revised Budget.The realization of government expenditures consist of the realization of the centralgovernment expenditures Rp233.0 trillion (32.5% of its 2009 Budget or 33.5% of its2009 Proposed Revised Budget) and transfer to regions Rp139.8 trillion (43.6% fromthe target in 2009 Budget or 45.2% from the target in the 2009 Proposed RevisedBudget).6

The realization of the central government expenditures are mostly dominated by thepersonnel expenditures Rp62.2 trillion (29.6%), debt interest payments Rp50.0trillion (21.3%), and subsidies Rp42.8 trillion (14.7%).Meanwhile, realization of the transfer to regions mostly come from general allocationfund (DAU) Rp108.0 trillion (77.7%) and revenue sharing (DBH) Rp18.4 trillion(13.1%).trilion Rp100.090.080.070.060.050.040.030.020.010.00.0Graph 10Government Expenditures Realization,January- June 200931.2 15.821.5 26.623.9 25.040.6 38.817.645.926.359.6Jan Peb Mar Apr May JunTransfer to RegionCentral Government Expenditurestrilion Rp45.040.035.030.025.020.015.010.05.00.0-9.96.2Grafik 11Central Government Expenditures Realization,January - June 2009Subsidies Interest Debt Payment Ministries/Agencies4.45.712.23.18.317.82.37.321.514.26.119.610.212.3Jan Peb Mar Apr May Jun35.030.0-Graph 12Transfer to Region Realization,January - June 2009Spec. Autonomy & Adjustment Fund DAK DAU DBHtrilion Rp25.020.015.010.05.00.0-1.53.00.84.22.00.531.0-0.815.615.6 15.515.515.68.40.3 0.34.1 4.60.7Jan Peb Mar Apr May Jun7

3. Budget DeficitOn one side the realization of revenues and grants have reached Rp367.2 trillion,whereas the realization of government expenditures have reached Rp372.9 trillion,thus, the 2009 first semester budget deficit has became Rp5.6 trillion (0.1% of GDP).If it compare to the realization in first semester of 2008, that reached a surplus ofRp61.5 trillion (1.4% of GDP), the performance of the 2009 budget for the firstsemester is relatively better in terms of the budget management.70.060.050.0Graph 13Budget Surplus (Deficit), SMT I 2008 - 2009trilion Rp40.030.020.061.510.00.0(10.0)(5.6)2008 1st SMT 2009 1st SMT4. Budget FinancingIn the Law on Budget 2009, budget financing is estimate at Rp51.3 trillion, thenadjusted to Rp139.5 trillion in the 2009 Fiscal Stimulus Document, and becomesRp133.0 trillion in 2009 Proposed Revised Budget.The realization of budget financing until the first semester of 2009 reached Rp47.8trillion (93.2% from its target in 2009 Budget or 36.0% from its target in the 2009Proposed Revised Budget).The realization is 22.9% lower in comparison with the same period in 2008,.The realization of budget financing consist of the realization of domestic financingRp70.2 trillion (115.0% from its target in 2009 Budget or 48.5% from its target in the2009 Proposed Revised Budget) and the realization of foreign financing minus Rp22.4trillion (237.2% from its the target in 2009 Budget or 190.3% from its target in 2009Proposed Revised Budget).The realization of domestic financing mostly comes from government securities/SBN(net) of Rp69.0 trillion. Meanwhile, the realization of foreign financing mostly comesfrom withdrawal of foreign loans Rp16.8 trillion and principal due at negative Rp35.0trillion.With the realization of budget financing reached Rp47.8 trillion, whereas the budgetdeficit only reached Rp5.6 trillion, the 2009 first semester have a budget surplus of8

Rp42.2 trillion. In the 2008 first semester, the budget surplus reached Rp123.5trillion.40.0Graph 14Budget Financing, January- June 200930.02.4trilion Rp20.010.00.0(10.0)(20.0)31.417.18.18.914.4(2.9) (1.9)(4.4) (3.8)Jan Peb Mar Apr MayJun(9.5)(11.8)(30.0)Foreign FinancingDomestic FinancingREALIZATION OF BUDGET, 1 st Semester 2008 - 2009(in trillion rupiah)RevisedBudgetReal.audited20081 stSemester% toRevisedBudgetBudgetProposedRevisedBudget20091 stSemester% toProposedRevisedBudgetA. REVENUE AND GRANTS 895.0 981.6 425.1 47.5 985.7 872.6 367.2 42.1I. DOMESTIC REVENUE 892.0 979.3 424.6 47.6 984.8 871.6 367.0 42.11. TAX REVENUE 609.2 658.7 307.5 50.5 725.8 652.1 288.5 44.2a. Domestic Taxes 580.2 622.4 288.8 49.8 697.3 632.1 279.5 44.2b. International Trade Tax 29.0 36.3 18.8 134.3 28.5 20.0 9.0 87.42. NON-TAX REVENUE 282.8 320.6 117.1 41.4 258.9 219.5 78.5 35.8a. Natural Resources 192.8 224.5 93.7 48.6 173.5 140.0 47.6 34.0b. Govt. Share from SOE's Profit 31.2 29.1 1.0 3.3 30.8 29.2 3.5 12.1c. Other non-tax revenues 58.8 63.3 22.4 38.0 49.2 44.4 26.3 59.2d. BLU Income 0.0 3.7 0.0 0.0 5.4 5.9 1.1 18.7II.Grants 2.9 2.3 0.5 16.5 0.9 1.0 0.2 20.5B. EXPENDITURE 989.5 985.7 363.6 36.7 1,037.1 1,005.7 372.9 37.1I. CENTRAL GOVERNMENT EXPENDITURE 697.1 693.4 246.9 35.4 716.4 696.1 233.0 33.51. Line Ministries Expend. 290.0 262.0 82.6 28.5 322.3 317.0 101.0 31.92. Non-Line Ministries Expend. 407.0 431.4 167.8 41.2 394.1 379.1 132.0 34.8II. TRANSFER TO REGION 292.4 292.4 116.8 39.9 320.7 309.6 139.8 45.21. Balanced Funds 278.4 278.7 113.6 40.8 297.0 285.3 134.9 47.32. Special Autonomy & Adjustment Fund 14.0 13.7 3.1 22.5 23.7 24.3 5.0 20.5C. OVERALL BALANCE (A - B) (94.5) (4.1) 61.5 0.0 (51.3) (133.0) (5.6) 0.0% defisit thd PDB (2.1) (0.1) (1.0) (2.5)D. FINANCING 94.5 84.1 62.0 65.6 51.3 133.0 47.8 36.0I. DOMESTIC FINANCING 107.6 102.5 82.0 76.2 60.8 144.8 70.2 48.51. Domestic Bank Financing (11.7) 16.2 (0.5) 4.6 16.6 56.0 1.1 1.92. Domestic Non-Bank Financing 119.3 86.3 82.5 69.2 44.2 88.8 69.2 77.9II.FOREIGN FINANCING (13.1) (18.4) (20.0) 152.5 (9.4) (11.8) (22.4) 190.31. Gross Drawing 48.1 50.2 9.9 20.6 52.2 70.7 16.8 23.82. Subsidiary Loan 0.0 (5.2) (1.4) 0.0 0.0 (13.0) (4.2) 32.73. Amortizations (61.3) (63.4) (28.5) 46.5 (61.6) (69.5) (35.0) 50.4SURPLUS/(DEFICIT) FINANCING 0.0 80.0 123.5 0.0 (0.0) 42.2a. Growth (%) 6.4 6.1 6.3 6.0 4.3 4.1b. Inflation (%) 6.5 11.1 11.0 6.2 5.0 3.7c. 3 Month SBI Rate (%) 7.5 9.3 8.2 7.5 7.5 8.5d. Exchange Rate (Rp/US$) 9,100.0 9,692.0 9,259.0 9,400.0 10,600.0 11,082.0e. Oil Price (US$/barel) 95.0 96.8 109.4 80.0 61.0 51.6f. Oil Production (MBCD) 0.927 0.931 0.923 0.960 0.960 0.9579