Jakarta: Indonesia's 2010 budget deficit will probably come in at 1.1 per cent of gross domestic product, less than the government's midyear estimate of 1.5 per cent and 2011's target of 1.8 per cent, Finance Minister Agus Martowardojo said.
"In the long run we expect our budget to be balanced," Martowardojo said at a year-end press briefing at the Finance Ministry in Jakarta yesterday.
"If the situation is still like today, where next year world economic growth is expected to be lower than this year, we still want to provide stimulus. We will always maintain our deficit to be below 2 per cent."
Economists including New York University's Nouriel Roubini, who is credited with predicting the financial crisis, have said global growth may slow in 2011 compared with this year. Emerging market economies are grappling with capital inflows that have pushed up currencies, making the region's exports more expensive.
Indonesia's inflation this year will be about 6.5 per cent, faster than its target of 4 per cent to 6 per cent, partly due to volatile food prices, Martowardojo said. Next year's inflation target is about 5.3 per cent, he said.
Five state-owned financial institutions, including PT Bank Mandiri, have given their commitment to buy back bonds to ease the impact of sudden capital outflows during a crisis, Agus Suprijanto, acting head of fiscal policy at the Finance Ministry, said after the press briefing.
The government is still in talks over the use of their funds and will prioritise funding from the state budget for any buybacks, he added.
The four other institutions are PT Bank Rakyat Indonesia, PT Bank Negara Indonesia, state pension fund PT Taspen and Lembaga Penjamin Simpanan, which guarantees deposits at banks in Indonesia, he said.
