The bleak global and domestic economies are to blame. Indonesian exports have been falling due to weak global demand and low commodity prices (Indonesia being a key commodity exporter), while Indonesian imports have been falling due to slowing domestic economic growth over the past couple of years causing a drop in domestic demand for imports of capital goods (due to fewer investment and business expansion) and consumer goods (due to weaker purchasing power). The positive matter, however, is that imports have been dropping more severely than exports and therefore Indonesia has seen a trade surplus since 2015. This has also supported a stable current account deficit and therefore the Indonesian rupiah is more stable as well now.
However, non-oil & gas tax revenue realization so far this year has been better compared to realization in the same period one year earlier. Dwijugiasteadi informed that non-oil & gas tax revenue realization up to 26 September 2016 climbed 13.7 percent (year-on-year). The government’s tax amnesty program is partly to thank for this improvement.
So far, the amnesty program added nearly 8,500 new taxpayers to the country’s tax database. New and existing taxpayers have declared a total of IDR 1,950.6 trillion (approx. USD $149 billion) in unreported assets under the program so far, including IDR 98.9 trillion worth of repatriated assets. The Indonesian government received about IDR 46.5 trillion in additional tax as a result of the tax amnesty program. This shows that after a weak start, the program is getting some serious momentum. Fund repatriations, however, remain sluggish, possibly due to the fact that tax tariffs in the so-called tax havens remains more attractive.
Indonesia is still expected to see a budget shortfall of about IDR 219 trillion (approx. USD $16.7 billion) as goverment revenue will not be enough to cover government spending this year. This would mean that the government needs to add more debt.