Economic Highlights:
2016 State Budget Draft Revision: Tax Amnesty To The Rescue
2016 State Budget Draft Revision: Tax Amnesty To The Rescue
¨ The government’s draft 2016 revised state
budget, which is currently under review by the House of Representative, saw a
4.8% cut in its revenue, much sharper than a 2.3% reduction in its expenditure.
As a result, it expects its budget deficit to be at 2.5% of GDP, marginally
higher than the initial projection of 2.2% of GDP but will be maintained at the
same level as in 2015.
¨ However, we beg to differ as we view its
projection of income tax from non-oil & gas sector as optimistic and will
likely to have disappointment. At the same time, the government needs to
continue its spending to support the country’s economic growth, forcing it to
incur a wider fiscal deficit of 2.7% of GDP in 2016, in our view.
¨ If the government resorts to cut its
expenditure further to make up the potential shortfall, it could pose a
downside risk to our real GDP growth forecast of 5.1% for 2016.
Kindly click the following link for the full report: 2016 State Budget Draft Revision: Tax Amnesty To The Rescue
Best regards,
Rizki Fajar
Vice President
Economist
PT. RHB Securities
Indonesia
