The Indonesian rupiah (Bloomberg filepix)

JAKARTA (Aug 13): The drop in Indonesian government's revenues stabilised in July, although income from corporate tax for the first seven months of the year remained in contraction, Finance Minister Sri Mulyani Indrawati said on Tuesday.

The government ran a budget deficit that equalled 0.41% of gross domestic product, or 93.4 trillion rupiah (US$5.9 billion, or RM26 billion), for the seven months ended July, the minister said in a press conference, bigger than the 0.34% deficit recorded in January to June.

Revenues totalled 1,545.4 trillion rupiah in the period, down 4.3% from the same period a year earlier, although the pace of decline slowed from the 6% fall in January to June, ministry data showed.

Spending up to July reached 1,638.8 trillion rupiah, up 12.2% year-on-year, reflecting expenditure for elections and the construction of Indonesia's new capital city in Borneo.

"Tax revenues have improved, but pressure from declining commodity prices is still felt. Spending is on track," Sri Mulyani said.

"Spending quality is important. Growth must be accompanied with quality and we also must be careful to maintain the deficit outlook in the third and fourth quarters," she said, adding that she did not want the budget to deviate too much from plans.

Tax revenues from mining and manufacturing sectors shrank 54% and 14%, respectively in January-July, from the same period in 2023.

Last month, the minister said the 2024 budget deficit was expected to be 2.7% of gross domestic product, higher than an initial target of 2.29%. Indonesia usually increases spending in the later part of the year, which often widens the budget deficit.

The minister did not provide a new forecast.

Sri Mulyani also said that geopolitical tensions and global market uncertainty remained risks for the domestic economy.

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