REPUBLIKA.CO.ID, JAKARTA -- Spending at ministries and state institutions has to be cut by up to Rp100 trillion to maintain the budget deficit at below 2.5 percent of the gross domestic product (GDP), stated Finance Minister Chatib Basri.

"If the spending is up and the deficit must remain the same, cuts must be made and the subsidy should also be reduced," the minister noted here on Wednesday.

Chatib emphasized that the spending cuts must reach Rp100 trillion since subsidy spending is estimated at Rp74.3 trillion in the revised 2014 budget, and thus, has the potential to burden the state budget.

"If the subsidy can be reduced, the spending cuts may have to reach Rp100 trillion," he reiterated.

To overcome overspending on fuel subsidy, Chatib pointed out that he had requested the Ministry of Energy to immediately excise control on subsidized oil consumption, so that it does not surpass 48 million kiloliters.

Subsidized fuel spending is forecast to soar as the assumption of the rupiah exchange rate against the US dollar will be down from Rp10.5 thousand in the current budget to Rp11.7 thousand in the revised 2014 budget.

The budget deficit has been set at 2.5 percent of the GDP in the revised 2014 budget or Rp251.7 trillion up from the target set in the current budget at 1.69 percent of the GDP or Rp175.4 trillion.

This change is the result of the state revenues being set at Rp1,597.7 trillion or down Rp69.4 trillion from Rp1,667.1 trillion in the current budget, while state expenditure has risen by Rp6.9 trillion from Rp1,842.5 trillion to Rp1,849.4 trillion.

To overcome the budget deficit, the President has signed the Presidential Instruction Number 4 of 2014 regarding austerity measures and spending cuts at ministries and state institutions in the framework of the implementation of the 2014 budget.

The total budget to be saved by ministries and state institutions is Rp100 trillion, so that the budget for ministries and state institutions, which was initially recorded at Rp637.8 trillion will total up to only Rp538.3 trillion in the revised 2014 budget.

The budget cuts will especially be enforced on honorarium, official trip costs, meeting costs, advertising, construction of office buildings, operational car procurement, social aid spending, excess tender funds, and budgets for activities that have not been bound by contracts.

Cuts and austerity measures cannot be applied on the education budget or budget originating from loans and grants as well as budget from non-tax state income from public services.

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