Indonesia will accumulate excess cash in this year’s budget and use it to help reduce borrowing in 2023, when it expects to face market volatility and a weakening global economy, its finance minister said on Thursday.
Southeast Asia’s largest economy has managed a strong fiscal position this year, as tax revenues got a boost from booming exports – powered by high commodity prices – and a post-pandemic recovery in economic activity.
As of the end of October, the government had collected excess cash of 270.4 trillion rupiah ($17.26 billion), although its overall budget was in a deficit of 169.5 trillion rupiah, or 0.91% of GDP.
Finance ministry officials have said the 2022 fiscal deficit could be near 3% of GDP.
“We will accumulate quite significant excess cash,” Sri Mulyani Indrawati told a news conference.
“In 2023, there may be volatility,” she warned, adding that maintaining a cash buffer would help the government to minimise its risks.
Next year, the government is targeting a budget deficit of 2.8% of GDP, assuming economic growth of 5.3%, compared with a forecast range of 5% to 5.3% for 2022.