Economy: Indonesia’s official reserve assets increased to a record high of  US$137.0 billion at the end of August 2020 from USD135.1 billion at the end of July 2020In its statement, the central bank said that the position of official reserve assets was equivalent to finance 9.4 months of imports or 9.0 months of imports and servicing government’s external debt, and well above the international adequacy standard of 3 months of imports.

Bank Indonesia considers that the official reserve assets position was able to support the external sector resilience and maintain macroeconomic and financial system stability. The increase of official reserve assets in August 2020 was influenced by government’s foreign loan withdrawal as well as tax revenues, and oil & gas export proceeds. Going forward, Bank Indonesia views that the official reserve assets remain adequate, supported by the stability and solid economic outlook, in line with the policy response to nurture economic recovery.

Fiscal: The government has reduced the state revenue target in 2021 by Rp32.7 trillion to Rp1,743.7 trillion, down from the earlier proposed Rp1,776.4 trillion in the 2021 state budget plan. “The Rp32.7 trillion drop came from the declining target of total tax revenue at Rp37.4 trillion,” Finance Minister  stated during a meeting with the budget committee of the House of Representatives today. The total tax revenue target was slashed to Rp1,444.5 trillion, from the earlier proposal of Rp1,481.9 trillion, after considering the declining realization, as of August 2020, and projected lower revenue until the year-end. The target in the 2021 state budget plan conveyed by the president with lower basis in 2020 has resulted in a high implicit growth of nearly 18 percent.

Of the total tax revenue, the government cut revenue from tax by Rp38.9 trillion to Rp1,229.6 trillion, comprising Rp4.6 trillion from oil and gas, Rp20.7 trillion from non-oil and gas, Rp27.5 trillion from value-added tax, and Rp4.7 trillion from other taxation. Revenue from customs has increased Rp1.5 trillion. The target for non-tax revenue had risen by Rp4.7 trillion to reach Rp288.2 trillion, from the earlier target of Rp283.5 trillion in the 2021 state budget plan. The non-tax revenue from oil resources has increased by Rp1.92 trillion; gas resources, up Rp630 billion; Domestic Market Obligation (DMO) rose Rp130 billion; and ministries/institutions increased by Rp2 trillion. Related news: Revenues in 2020 state budget draft reach Rp2,221.5 trillion

Finance: Negative market’s reaction on the plan to reimpose large-scale social restriction has drove down the Indonesian stocks by more than 5% on 10 September It was the lowest in close to three months following an announcement that capital city Jakarta will reinstate partial lockdown measures to slow the spread of the coronavirus. The fall came a day after Jakarta Governor said he will reimpose large-scale mobility restrictions from next Monday as a rise in Covid-19 cases threatens to overwhelm the city’s health system. Indonesia’s stock and currency markets touched multi-month lows on Friday as fresh COVID-19 restrictions in Jakarta ate into hopes of an economic recovery, while overnight selling on Wall Street kept sentiment across Asia subdued.

The main index rose 2 percent today but was still on course for a weekly fall of around 5% that would be its worst performance since March. The rupiah, the region’s worst hit currency this year, slipped 0.4% and was heading for its biggest weekly loss in a month. Jakarta was placed under a partial lockdown from April, but measures were eased starting in June. Restrictions set to be reinstated will be similar to those previously imposed, such as temporarily closing offices except for “essential” sectors, limiting public transport services and forbidding dining in restaurants. Several economic ministers in the Cabinet have expressed their concern over decision and their possible impact on economic recovery.

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