REPUBLIKA.CO.ID, JAKARTA -- Government spending has continued to increase despite the policy of slashing it due to a rise in energy subsidy, Finance Minister Chatib Basri said.

"Subsidy has increased significantly and as a result government spending has gone up," he said here on Thursday.

Government spending in the revised 2014 state budget has been set at Rp1,280.4 trillion, up Rp30.4 trillion from the earlier target of Rp1.249,9 trillion.

Budget allocations to ministries and government institutions fell from Rp35.5 trillion to Rp602.3 trillion in the revised 2014 state budget from the previous forecast of Rp637.8 trillion.

However, budget allocations to non-ministerial institutions covering energy spending rose Rp66 trillion to Rp678.1 trillion from the previous target of Rp612.1 trillion.

Energy subsidy set at Rp350.3 trillion comprises fuel subsidy of Rp246.5 trillion, which has increased Rp35.8 trillion from the previous forecast of Rp210.7 trillion and electricity subsidy of Rp103.8 trillion, which has gone up Rp32.5 trillion from the early forecast of Rp71.4 trillion.

The revised 2014 state budget has been formulated by considering expenditure control through the limitation of fuel subsidy, the adjustment of power tariffs, and the reduction of expenditures of ministries and non-ministerial institutions.

With the expenditure control policy, the minister was convinced that the budget deficit this year will reach 2.4 percent of the gross domestic product.

"If we do nothing the budget deficit may soar to 4.69 percent," he said.

In the revised 2014 state budget, the government has set macro basic assumptions including economic growth at 5.5 percent, inflation rate at 5.3 percent, the rupiah's exchange rate at Rp11,600 per dollar, and interest rate of three-month state treasury notes at 6.0 percent.

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