Government Rupiah Assumption at Level 15,000. The Ministry of Finance (Kemkeu) delivered a proposed change to State Budget (APBN) posture 2019 assuming the rupiah at IDR15,000/USD. As well as, this change is based on the existence of a proposal of the Bank Indonesia (BI) rupiah exchange rate estimate in 2019 is in the range of IDR14,800/USD to IDR15,000/USD.
Furthermore, this rate change will make the State revenue will increase valued at IDR10.3Trn, consisting of PPh in oil and gas that are experiencing a rise worth IDR2.2Trn and from Non State Tax Receipts (PNBP) increase valued at IDR8.1Trn. PNBP consists of natural resources (SDA) oil and gas worth IDR6.2Trn and the natural resources of the non oil and gas worth IDR1Trn, there are also PNBP increase worth IDR900Bn.
Indonesia will increase State revenues from IDR2,142.5Trn in the original State Budget, increased to IDR2,154.8Trn at panja A with rate of IDR14,500/USD, while with the exchange rate of IDR15,000/USD, income of IDR2,165.1Trn. State spending will also be increased by IDR10.9Trn to IDR2,462.3Trn. Where State spending is made up of an increase in energy subsidies increased by IDR6.3Trn, other spending i.e. health and education expenditures amounting to IDR2.6Trn, and the results increased funds for IDR2Trn.
On the other hand, the Government of Indonesia maintain budget deficits still amounted to 1.84%, of gross domestic product (GDP), the country’s spending any backup set to be IDR14.4Trn to disaster relief, among others, in order of construction and rehabilitation of areas hit by the disaster in Lombok and Palu.
Similar things are also conducted by Bank Indonesia, proposed changes to the assumptions of the exchange rate of rupiah to draft legislation (RUU) of state budget fiscal year 2019. In work meetings held the Agency’s budget (Banggar) House of Representative, Monday (15/10), Bank Indonesia have revised the rising exchange rate assumptions for the year 2019 to become IDR14,800/USD — IDR15,200/USD. Earlier, Bank Indonesia have predicted the rupiah exchange rate in the year 2019 are in the range of IDR14,300/USD — IDR14,700/USD.
The pressure on the exchange rate be very large due to sentiment in emerging market countries as the financial crisis experienced by Turkey, Argentina, and a number of other countries. This imposes the discharge flow of foreign capital from developing countries including Indonesia, so the exchange rate weakened.
United State (US) trade tensions and China has also become one of the triggers of the weakening of the exchange rates that is seen sharply since September. The potential for continued global uncertainty due to this trade war are even presented in the annual meeting of the International Monetary Fund (IMF) — World Bank in Bali yesterday. At least there are some indicators that support the global economy uncertainty, such as:
First, monetary policy direction developed countries who tend toward normalization are way up. FFR increase interest rates (Fed Funds Rate) next year will still be going on. The possibility of go up 2-3 times, more than four times this year. In addition to the US, Europe are also expected to join the normalize monetary policy in the second half of next year, making European currencies can compensate for the strengthening of the US dollar.
Second, the uncertainty from the US and China trades war is still there. However, the meeting discussed the IMF-World Bank, and the desire to encourage a more open trade policies more constructively.
Third, the Bank of Indonesia and the Government has made a number of steps to narrow the Current Account Deficit (CAD), as well as encourage the influx of foreign capital flows. Bank Indonesia has already traveled a step not only raises interest rates but the stability of the exchange rate by encouraging foreign exchange markets, swap policy, as well as Domestic Non Deliverable Forward (DNDF).