Indonesia posts $8.7 billion Q1 budget surplus, stronger rupiah seen cutting deficit outlook

JAKARTA (Reuters) – Indonesia posted a 128.5 trillion rupiah ($8.69 billion) budget surplus in the first quarter on strong tax collection and the recent strengthening of the rupiah currency could help further reduce this year’s deficit, officials said on Monday.

Indonesia’s tax take rose dramatically in 2022 amid high global commodity prices and this year’s revenues have remained strong, based on March data, amid improvement in the domestic economy after pandemic restrictions were lifted late last year.

Revenues in January to March stood at 647.2 trillion rupiah, up 29% from the same period last year, while spending rose 5.7% to 518.7 trillion rupiah, according to finance ministry data.

The first quarter’s surplus was equivalent to 0.61% of gross domestic product (GDP) and compared with a 0.06% surplus in 2022’s first three months.

The recent appreciation of the rupiah against the U.S. dollar would bode well for government revenues, including increasing revenues from royalties on natural resources and reducing interest payments on debt and spending on fuel subsidies, Febrio Kacaribu, the head of the ministry’s fiscal policy agency, told a news conference.

“The budget deficit will be more under control,” Febrio said.

The rupiah has strengthened more than 5% so far this year, better than other emerging Asian currencies, even as it fell 0.6% on Monday’s trading.

Febrio did not offer a new forecast for the 2023 budget deficit. The government targets a deficit of 2.84% of GDP this year.

Southeast Asia’s largest economy likely grew 5% in the first quarter and the government maintained a GDP growth target of 5.3%, Febrio added.

Indonesia’s statistics bureau is due to release first-quarter GDP data early next month.

Last year, the economy grew 5.31%.

($1 = 14,780.0000 rupiah)

(Reporting by Stefanno Sulaiman and Gayatri Suroyo; Editing by Ed Davies, William Maclean)