Indonesia posts a budget surplus of more than Rp 128.5 trillion (approximately US$8.65 billion) in the first quarter of the year due to strong revenue collection. The figure is a tenfold year-on-year (yoy) increase from Rp 11.1 trillion recorded in the same period last year. 

According to the Finance Ministry, the revenue increase was driven by tax collection, which rose by more than 33 percent yoy to Rp 433.2 trillion. This comes after an already strong annual increase of 41.6 percent recorded in the first quarter of 2022. 

Tax revenue grew across all segments in this first quarter, albeit growth in collection from manufacturing and trade, which accounts for half of all tax revenue, was slower than last year. Meanwhile, non-tax revenue in the first quarter grew by more than 43 percent to Rp 142.7 trillion due to revenue from coal and mineral, which tripled to Rp 44.3 trillion from last year’s Rp 15.1 trillion. 

Despite the strong surplus, the government plans to continue issuing bonds through the first half of this year. Government debt issuance grew by more than 62 percent yoy to Rp 217.6 trillion in the first quarter from Rp 133.6 trillion in the same period of last year. 

“This is to build a cash buffer to anticipate uncertainty in global financial markets,” FInance Minister Sri Mulyani said, as quoted by The Jakarta Post. 

Key Interest Rate Unchanged 

Meanwhile, Bank Indonesia (BI) has decided to keep key interest rates unchanged for the third month in a row as it deems its stance adequate to meet inflation targets and sees consumer price index (CPI) growth on a downward trajectory.  

Following its monthly monetary policy meeting, BI announced on Tuesday that its benchmark seven-day reverse repo rate would remain at 5.75 percent, the level it reached in January after being raised by a cumulative 225 basis points in the beginning in August of last year.  

BI Governor Perry Warjiyo characterized the current monetary policy as “preemptive and forward-looking” and said inflation was easing faster than expected.  

Core inflation eased to 2.97 percent in March from 3.09 percent the previous month, while headline CPI growth dropped to 4.97 percent yoy in March, marking a slowdown from 5.47 percent recorded in February.  

BI forecasts Indonesia’s economy to grow between 4.5 and 5.3 percent this year, likely on the upper side of that range, according to the governor.