## wpiea2019081

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---

### I. Introduction: role of Public Sector Balance Sheets (PSBS)
- PSBS provide a framework for comprehensive and in-depth analysis of fiscal risks and policies.
- PSBS extends perimeter of analysis beyond general government to the entire public sector including public corporations (state-owned enterprises).
- PSBS attributes allow for a richer assessment of fiscal risks and the impact of fiscal policy on public net worth than standard fiscal policy analysis.
- Indonesia context (2016 snapshot):
  - Total assets: 166 percent of GDP in 2016.
  - Financial and nonfinancial public corporation assets: one third of total assets.
  - Natural resources: one fifth of total assets.
  - Total public sector liabilities: 73 percent of GDP in 2016.
  - General government gross debt: 28 percent of GDP in 2016.
- Static net worth declined from 148 percent of GDP in 2010 to 93 percent in 2016, driven mainly by gradual depletion and loss in value of mineral wealth.
- Intertemporal (net present value) PSBS analysis includes future revenues and expenditures and enables scenario analysis despite greater uncertainty.

### II. Indonesia’s Public Sector Balance Sheet — 2016 snapshot and trends
- Aggregate 2016 metrics (Annex II table values, percent of GDP):
  - Total assets (by subsector): General Government 123.8 | Non-Financial Public Corporations 26.3 | Financial Public Corporations 39.6 | Public Sector Total 165.6 | Public Sector Consolidation -24.1
  - Nonfinancial assets: 95.8 | 20.0 | 1.0 | 116.8 | 0.0
  - Fixed assets: 19.1 | 16.8 | 0.4 | 36.4 | 0.0
  - Land: 15.5 | 1.9 | 0.5 | 17.9 | 0.0
  - Mineral and energy resources: 60.2 | 0.0 | 0.0 | 60.2 | 0.0
  - Financial assets: 28.0 | 6.4 | 38.6 | 48.8 | -24.1
  - Currency and deposits (financial assets): 3.6 | 2.7 | 4.4 | 8.4 | -2.4
  - Debt securities (financial assets): 0.0 | 0.5 | 16.7 | 12.4 | -4.7
  - Loans (financial assets): 0.9 | 0.0 | 15.6 | 14.9 | -1.6
  - Equity and investment fund shares (financial assets): 20.2 | 0.2 | 0.2 | 6.4 | -14.3
  - Liabilities: 31.3 | 26.3 | 39.6 | 73.1 | -24.1
  - Debt securities (liabilities): 23.0 | 2.4 | 2.3 | 23.0 | -4.7
  - Loans (liabilities): 5.5 | 3.6 | 1.1 | 8.7 | -1.6
  - Currency and deposits (liabilities): 0.0 | 0.0 | 27.3 | 24.9 | -2.4
  - Equity and investment fund shares (liabilities): 0.0 | 14.4 | 5.8 | 6.0 | -14.3
  - Net financial worth: -3.3 | -20.0 | -1.0 | -24.3 | 0.0
  - Net worth: 92.5 | 0.0 | 0.0 | 92.5 | 0.0
- Key composition and dynamics:
  - Non-financial assets comprised 70 percent of total assets; stock of natural resources comprised more than half of non-financial assets.
  - Financial assets were concentrated in debt securities and loans; public banking sector sizable (currency and deposit obligations equal to 25 percent of GDP in 2016).
  - Debt securities (primary funding source for central government): 23 percent of GDP.
  - Pension liabilities: 2 percent of GDP.
- Net worth trajectory and drivers:
  - Net worth fell from 148 percent of GDP in 2010 to 93 percent in 2016 as assets fell from 205 percent of GDP to 166 percent of GDP.
  - Decrease mainly due to loss in value of mineral resources.
  - Public sector liabilities increased from 57 percent of GDP in 2010 to 73 percent of GDP in 2016, driven by:
    - Debt securities increase: 9 percent of GDP.
    - Currency and deposits in financial public corporations increase: 3 percent of GDP.
    - Value of equity in public corporations increase: 4 percent of GDP.
  - Net financial worth deteriorated from negative 21 percent of GDP in 2010 to negative 24 percent of GDP in 2016.
- Flows affecting net worth (selected 2016 flows):
  - Total revenue: 25 percent of GDP.
  - Total expenditures (expenses and net investment in non-financial assets): 27 percent of GDP.
  - Net operating deficit: 2 percent of GDP in 2016, lowering net worth.
  - In 2011, other economic flows totalled close to 20 percent of GDP while net operating balance was almost balanced.
- Consolidation and interlinkages:
  - Consolidation in 2016 comprised 24 percent of GDP, reflecting strong interlinkages across subsectors.
  - Around 22 percent of total deposits are held by the central bank or public banks; consolidation of about 5 percent of GDP of total currency and deposits in 2016.
  - Government ownership averages more than 71 percent of total equity of public corporations, producing cross-holding consolidation of 14 percent of GDP in 2016.

### III. Analysis of Public Corporations
- Overview and scale:
  - 118 public corporations owned by the central government.
  - Public corporations comprise more than 35 percent of unconsolidated public sector assets.
  - Public corporations’ liabilities accounted for 66 percent of GDP in 2016.
  - Financial public corporations accounted for more than 40 percent of unconsolidated public sector liabilities.
  - Five largest companies (financial or energy sectors) account for about half of all public corporation assets.
- Explicit and implicit government support (2016):
  - Explicit state support in 2016: 2.3 percent of GDP.
  - Adding implicit costs of 13 largest public corporations raises total state assistance to 3.3 percent of GDP in 2016.
  - Public corporations’ tax, interest, and dividend payments to general government averaged about 1 percent of GDP from 2011–16.
- Financial performance of major public corporations (Annex III, financial year ending in 2016 unless otherwise noted):
  - Memo: Nominal GDP (IDR - millions): 12,406,810
  - Aggregate public corporation metrics:
    - From January 2010 until December 2016, Indonesia’s public corporations had an average ROE of 9.3 percent, below the Jakarta Composite Index (JCI) average return of 12.4 percent.
    - In 2016, aggregate net earnings were close to 1 percent of GDP, yielding an average ROE for public corporations of 9.3 percent.
  - Selected financial corporations (assets, equity, ROA, loan/deposit, capital adequacy, NPL ratio):
    - PT Bank Mandiri — Assets: 8.37 — Equity: 1.24 — ROA (Financial): 2.2 — Loan/deposit: 82.5 — Capital adequacy: 14.8 — NPL ratio: 4.2
    - PT Bank Rakyat Indonesia (BRI) — Assets: 8.09 — Equity: 1.18 — ROA: 3.1 — Loan/deposit: 84.9 — Capital adequacy: 14.6 — NPL ratio: 2.2
    - PT Bank Negara Indonesia (BNI) — Assets: 4.86 — Equity: 0.72 — ROA: 2.1 — Loan/deposit: 86.5 — Capital adequacy: 14.8 — NPL ratio: 3.0
    - PT Bank Tabungan Negara (BTN) — Assets: 1.73 — Equity: 0.15 — ROA: 1.1 — Loan/deposit: 101.5 — Capital adequacy: 8.9 — NPL ratio: 2.8
    - Total financial: Assets: 23.3 — Equity: 3.5
  - Selected nonfinancial corporations (assets, equity, ROE, current ratio, debt ratio, Debt/EBITDA):
    - PT PLN — Assets: 9.46 — Equity: 0.14 — ROE: -1.1 — Current ratio: 0.83 — Debt ratio: 44.7 — Debt/EBITDA: 4.6
    - PT Pertamina — Assets: 3.36 — Equity: 0.26 — ROE: 1.1 — Current ratio: 2.00 — Debt ratio: 114.0 — Debt/EBITDA: 29.3
    - PT Telkom — Assets: 1.06 — Equity: 0.00 — ROE: 26.3 — Current ratio: 1.20 — Debt ratio: 70.2 — Debt/EBITDA: 0.5
    - PT Pupuk Indonesia — Assets: 0.62 — Equity: 0.00 — ROE: 14.6 — Current ratio: 1.17 — Debt ratio: 108.7 — Debt/EBITDA: 6.7
    - PT PGN — Assets: 0.51 — Equity: 0.03 — ROE: 23.7 — Current ratio: 2.61 — Debt ratio: 115.6 — Debt/EBITDA: 5.7
    - PT Krakatau Steel — Assets: 0.32 — Equity: 0.00 — ROE: 3.8 — Current ratio: 0.81 — Debt ratio: 114.0 — Debt/EBITDA: loss
    - PT Garuda Indonesia — Assets: 0.28 — Equity: 0.00 — ROE: -2.1 — Current ratio: 0.75 — Debt ratio: 270.1 — Debt/EBITDA: 24.9
    - PT Waskita Karya — Assets: 0.20 — Equity: 0.05 — ROE: 13.4 — Current ratio: 1.17 — Debt ratio: 266.2 — Debt/EBITDA: 6.0
    - Total nonfinancial: Assets: 15.8 — Equity: 0.5
- Leverage and liquidity:
  - Aggregate current ratio for non-financial public corporations: 1.3 (norm cited as 2).
  - Several major companies (Pupuk, PGN, Waskita, Garuda, Krakatau Steel) have liabilities exceeding 5 times EBITDA (high Debt/EBITDA values), indicating debt-servicing risks.
  - Public corporation liabilities (excluding equity) fell from 63 percent of assets in 2014 to 45 percent in 2016, mainly due to PLN one-off asset revaluation in 2015.
- Implicit financial costs:
  - Definition: implicit cost = difference between return comparable private companies generate (proxy: JCI) and return generated by the public corporation.
  - Causes include non-commercial/quasi-fiscal activities, governance leakages, occupancy of public land rent free, inefficiency.
  - Trend 2010–16: aggregate implicit cost trended upward; sharp rise in 2015–2016 driven in part by PLN asset revaluation in 2015.
  - Rising implicit costs at PLN and Pertamina since 2012 have gradually overshadowed the annual net excess returns earned by other public corporations.
- Fiscal risk assessment:
  - Outstanding liabilities of high-risk entities: 6.5 percent of GDP in 2016.
  - Total tax collections: 12 percent of GDP.
  - Historical precedent: after the Asian crisis, government recapitalization of PLN and several public banks amounted to 4 percent of GDP.
- Bank performance and capitalization (2012–16 period and 2016 snapshot):
  - Average ROE over 2012–16: 17.5
  - Lowest average ROE over that period: 12.6 percent for BTN.
  - Banks’ average regulatory capital to risk-weighted assets ratio in 2016: slightly above 20 percent (IMF, 2017).
  - BTN’s adequacy ratio: 8.9 percent.
  - Around 75 percent of the four banks’ funding comes from deposits.

### IV. Using PSBS for intertemporal analysis and policy scenarios
- Intertemporal PSBS framework:
  - Combines static balance sheet with net present value of future public sector cash flows over a 50-year horizon beyond the static year.
  - Static PSBS evolution projected over 2017–23 using IMF staff projections from the April 2018 WEO database.
  - Financial- and non-financial public corporations (except Pertamina) assumed to evolve in line with nominal GDP.
  - Pertamina projections reflect April 2018 WEO oil and gas price projections and pro-forma forecasts.
  - Discount rate for intertemporal component based on implicit effective nominal interest rate on general government debt (2001–2017 average 5.8 percent); baseline implies long-run real interest rate under the baseline of 2.7 percent.
- Baseline intertemporal net worth:
  - Indonesia’s public sector intertemporal net worth was slightly positive in 2016, projected to turn negative by 2023 (projected negative 18.2 percent in 2023 driven by decrease in natural resource assets relative to GDP).
  - Projected investment by general government insufficient to stabilize fixed assets relative to GDP given depreciation of 4 percent per annum (excluding land and oil and mineral reserves).
  - Present values of projected revenues and expenditures are several times larger than the stock of assets and liabilities on the static balance sheet in 2023.
- Sensitivity analysis (2023 intertemporal net worth):
  - One-time 10 percent increase/decrease in the level of real GDP in 2024 → ± 27 (percent of baseline GDP) change in intertemporal net worth.
  - Increase/decrease in the annual growth rate of real GDP by 50 basis points → ± 50 (percent of baseline GDP) change in intertemporal net worth.
  - Discount rate sensitivity (2001–17 average 5.8 percent, standard deviation 45 basis points):
    - Increase of one standard deviation in the discount rate → + 10 (percent of baseline GDP) change in intertemporal net worth.
    - Decrease of one standard deviation in the discount rate → - 11 (percent of baseline GDP) change in intertemporal net worth.

### V. Investment scenario — tax-financed public investment (authorities’ infrastructure plans)
- Authorities’ infrastructure plan:
  - Total cost equivalent to 32 percent of GDP to be implemented by 2022.
  - General government plans to contribute a tenth of the cost; public corporations about another third; private sector the rest.
  - General government revenue trend: fell from about 19½ percent of GDP in 2008 to 14 percent of GDP in 2017.
- Model assumptions (G20MOD → PSBS):
  - General government tax revenues increase by 1 percent of GDP each year from 2019–21; cumulative permanent increase relative to baseline is 3 percent of GDP.
  - Additional tax revenue in 2019–21 finances general government investment; investment efficiency = 0.67 (only two thirds of investment spending assumed effective) in baseline scenario.
  - Monetary policy accommodation: policy rate unchanged (in accommodation scenarios), inducing a fall in real interest rates.
  - Public investment multiplier: 1.2–1.4 in first couple of years, fades to zero by 2025.
  - From 2022 onwards, permanently higher tax revenue finances additional health, pension, and education spending, except small amount to offset depreciation of 4 percent per annum on new capital stock.
- Effects on GDP and public sector wealth:
  - Level of real GDP rises by 2¾ percent in the short-term relative to baseline and permanently by 1⅓ percent under tax-financed investment with monetary accommodation.
  - Increase in general government capital stock from 2019–21: about 4 percent of GDP; public sector net assets increase by same amount.
  - Intertemporal component (PV of primary balances over 50 years) improves by about 6½ percent of GDP (baseline tax-financed investment with accommodation).
- Scenario outcomes (changes from baseline, percent of baseline GDP unless otherwise noted):
  - Long-run level of real GDP (percent of baseline):
    - Tax-financed investment, monetary policy accommodation → 1.3
    - Tax-financed investment with structural reforms → 2.2
    - Tax-financed investment, no accommodation → 0.5
    - Debt-financed investment, no accommodation → 1.0
  - Net assets (including capital stock): 4.2; 6.3; 3.1; -1.4
  - PV of primary balance: 2.2; 3.5; 1.2; 2.3
  - Net worth: 4/6.5; 9.7; 4.5; 0.9
  - Notes: 1/ Assumes investment efficiency of 0.67. 2/ Assumes full investment efficiency. 3/ Interest rate on general government debt adjusts with changes in policy rate, but assume no change in interest premia due to higher debt levels. Interest rates on debt return to baseline rate by 2028. 4/ Components do not sum to change in net worth due to rounding.
- Role of investment efficiency and financing:
  - Tax-financed investment with monetary accommodation yields a positive change in net worth of 6½ percent of GDP.
  - Tax-financed investment without accommodation yields a positive change in net worth of 4.5 percent of GDP.
  - Debt-financed investment (no accommodation) yields about 1 percent of GDP change in net worth and can raise policy rates and interest payments, reducing net worth gains.
  - Full investment efficiency (structural reforms) could add another 3 percentage points of GDP to intertemporal net worth in the best-case scenario.
- Monetary policy sensitivity:
  - With accommodation (policy rate unchanged), permanent GDP increase: 1⅓ percent; net worth improvement: 6½ percent of GDP.
  - Without accommodation (policy rate raised to keep real interest rates unchanged), permanent GDP increase: about ½ percent; net worth improvement: 4½ percent of GDP.
  - Under the no accommodation scenario, G20MOD projects the policy interest rate to increase an average of 60 basis points during 2019–21 and taper back to baseline by 2024.

### VI. Conclusions and policy recommendations
- Key diagnostics:
  - Indonesia’s public sector balance sheet is large but shrinking: public assets were 166 percent of GDP in 2016 with natural resources and public corporations as significant components.
  - Public sector wealth was positive in 2016 but is projected to turn negative over the medium term as natural resources are depleted.
- Policy recommendations (quantified and operational):
  - Use the public sector balance sheet approach to inform fiscal policy and capital allocation decisions.
  - For public corporations that earn below-market returns in commercial sectors, pursue governance and operational reforms to improve commercial viability.
  - Explicitly fund non-commercial/quasi-fiscal activities from the budget so the government obtains a clearer picture of public corporations’ ability to generate adequate returns and so these costs are weighed against other spending priorities.
  - Consider divestment where reforms fail: sell public stakes and use proceeds to pay down high-cost debt or invest in public goods with high social returns.
  - Structure public investments to improve balance sheet resilience (e.g., favoring more liquid portfolio investments over illiquid equity stakes where appropriate).
  - Implement a medium-term revenue strategy (MTRS) to raise tax revenue and finance priority infrastructure.
  - Improve public investment management to raise investment efficiency and magnify gains to GDP and public net worth.
- Key quantified policy outcome:
  - A tax-financed public investment surge (with assumptions above) can generate about 6½ percent of GDP improvement in public sector net worth and a permanent increase in the level of real GDP of 1⅓ percent; investment efficiency improvements could add another 3 percentage points of GDP to intertemporal net worth in the best-case scenario.

*Source: wpiea2019081, IMF staff calculations and Indonesian authorities (excerpts from the referenced chapter).*

### References .............................................................................................................

### wpiea2019081 - References

### I. Introduction
- Public sector balance sheets (PSBSs) provide a framework for comprehensive and in-depth analysis of fiscal risks and policies.
- PSBS extends perimeter of analysis beyond general government to the entire public sector including public corporations (state-owned enterprises).
- PSBS attributes allow for a richer assessment of fiscal risks and the impact of fiscal policy on public net worth than standard fiscal policy analysis, which tends to focus on general government deficits and debts.
- Indonesia’s public sector is sizable and diverse, offering fertile ground for PSBS analysis:
  - Total assets: 166 percent of GDP in 2016.
  - Financial and nonfinancial public corporation assets: one third of total assets.
  - Natural resources: one fifth of total assets.
  - Total public sector liabilities: 73 percent of GDP in 2016.
  - General government gross debt: 28 percent of GDP in 2016.
- Static net worth declined from 148 percent of GDP in 2010 to 93 percent in 2016, driven mainly by gradual depletion and loss in value of mineral wealth.
- Intertemporal (net present value) PSBS analysis includes future revenues and expenditures and enables scenario analysis despite greater uncertainty.

### II. Indonesia’s Public Sector Balance Sheet (2016 snapshot and trends)
- Aggregate 2016 metrics:
  - Total assets: 165.6 percent of GDP (broken down in Table 1 as Non-Financial 123.8, Financial 26.3, Total assets 149.0? — preserve table presentation: "Non-Financial  Financial Total assets123.826.339.6165.6")
  - Nonfinancial assets line: "95.820.01.0116.8" as presented in table.
  - Financial assets line: "28.06.438.648.8" as presented in table.
  - Total liabilities line: "31.326.339.673.1" as presented in table.
  - Debt securities: "23.02.42.323.0" as presented in table.
  - Net Financial Worth: "-3.3-20.0-1.0-24.3" as presented in table.
  - Net Worth: "92.50.00.092.5" as presented in table.
  - Public corporations / General Government / Public Sector columns reflected as in table.
- Key asset and liability composition:
  - Non-financial assets comprised 70 percent of total assets; stock of natural resources comprised more than half of non-financial assets.
  - Financial assets: debt securities and loans were largest components.
  - Currency and deposit obligations: 25 percent of GDP in 2016 (reflecting a large public banking sector comprising over half of total financial assets).
  - Debt securities (primary funding source for central government): 23 percent of GDP.
  - Pension liabilities: 2 percent of GDP.
- Net worth trajectory and drivers:
  - Net worth fell from 148 percent of GDP in 2010 to 93 percent in 2016 as assets fell from 205 percent of GDP to 166 percent of GDP.
  - Decrease mainly due to loss in value of mineral resources.
  - Public sector liabilities increased from 57 percent of GDP in 2010 to 73 percent of GDP in 2016, driven by:
    - Debt securities increase: 9 percent of GDP.
    - Currency and deposits in financial public corporations increase: 3 percent of GDP.
    - Value of equity in public corporations increase: 4 percent of GDP.
  - Net financial worth deteriorated from negative 21 percent of GDP in 2010 to negative 24 percent of GDP in 2016.
- Flows affecting net worth:
  - Changes reflect operating activities and valuation changes; e.g., in 2016:
    - Total revenue: 25 percent of GDP.
    - Total expenditures (expenses and net investment in non-financial assets): 27 percent of GDP.
    - Net operating deficit: 2 percent of GDP, lowering net worth similarly as other economic flows were close to zero.
  - In 2011, other economic flows totalled close to 20 percent of GDP while net operating balance was almost balanced.
- Consolidation and interlinkages:
  - Consolidation in 2016 comprised 24 percent of GDP, reflecting strong interlinkages across subsectors.
  - Around 22 percent of total deposits are held by the central bank or public banks; consolidation of about 5 percent of GDP of total currency and deposits in 2016.
  - Government ownership averages more than 71 percent of total equity of public corporations, producing cross-holding consolidation of 14 percent of GDP in 2016.

### III. Analysis of Public Corporations
H3: Overview
- Public corporations are significant in Indonesia’s PSBS:
  - 118 public corporations owned by the central government.
  - They comprise more than 35 percent of unconsolidated public sector assets.
  - Total assets of financial and non-financial corporations grew from 2010 to 2016.
  - Public corporations’ liabilities accounted for 66 percent of GDP in 2016.
  - Financial public corporations accounted for more than 40 percent of unconsolidated public sector liabilities.
  - Five largest companies (financial or energy sectors) account for about half of all public corporation assets.
- Fiscal risk and government support:
  - Public corporations receive significant government assistance through explicit and implicit subsidies, equity injections, and capital transfers, trending downward from 2012–16.
  - Explicit state support in 2016: 2.3 percent of GDP.
  - Adding implicit costs of 13 largest public corporations (forgone profits from inefficient/non-commercial activities) raises total state assistance to 3.3 percent of GDP in 2016.
  - Public corporations’ tax, interest, and dividend payments to general government averaged about 1 percent of GDP from 2011–16.

H3: Financial Performance of Major Public Corporations
- Focus on 13 largest public corporations (comprising 60 percent of total public corporations’ assets) — financial details in Annex III.
- Equity and profitability:
  - Asset revaluation and a pickup in profitability boosted public corporation equity.
  - Revaluation of PLN assets in 2015 led to a spike in overall public corporation equity.
  - In 2016, aggregate net earnings were close to 1 percent of GDP, yielding an average return on equity (ROE) for public corporations of 9.3 percent.
  - Several banks (Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Tabungan Negara (BTN)), Pertamina, and Telecom had ROEs exceeding the public corporation average.
  - Most other companies generated negligible profits (0–5 percent of equity); Krakatau Steel made a loss.
- Leverage and liquidity:
  - Public corporation liabilities (excluding equity) fell from 63 percent of assets in 2014 to 45 percent in 2016, mainly due to PLN one-off asset revaluation in 2015.
  - Several major companies (Pupuk, Perusahaan Gas Negara (PGN), Waskita, Garuda, Krakatau Steel) have liabilities exceeding 5 times EBITDA, indicating high risk of debt-servicing difficulties.
  - Aggregate current ratio: 1.3 (norm cited as 2), implying tight liquidity buffers for non-financial public corporations.

H3: Potential Fiscal Risk and Risk Assessment
- High-level risk assessment summary:
  - Financial condition of several non-financial public corporations in 2016 posed an elevated fiscal risk (methodology summarized in Box 1 and Box 2; Figure 7 provides summary).
  - Outstanding liabilities of high-risk entities: 6.5 percent of GDP in 2016.
  - Total tax collections: 12 percent of GDP.
  - Implication: material fiscal impact if a public corporation risk materializes.
  - Historical precedent: after the Asian crisis, the government injected cash equivalent to 4 percent of GDP to recapitalize PLN and several public banks.
- Banks:
  - Large public banks posed a moderate fiscal risk in 2016.
  - The four large public banks (Bank Mandiri, BRI, BNI, and BTN) posted an overall simple average ROE (value not reproduced in provided excerpt).

### IV. Use of PSBS for Policy Scenario Analysis (Public Investment example)
- Intertemporal PSBS can assess implications of tax-financed public investment:
  - Including future revenues is important because power to tax is largest asset of most states.
  - Future expenditures must reflect future aging pressures.
  - PSBS analysis shows tax-financed public investment leads to accumulation of public sector assets that support a permanently higher real GDP.
  - Policy package (MTRS to raise revenue and invest in infrastructure) improves public wealth over the medium term.
- Caveat:
  - Intertemporal balance sheet requires many assumptions (e.g., future fiscal path) and is subject to considerably more uncertainty than static balance sheet, but is well-suited to scenario quantification.

*Source: wpiea2019081, IMF staff calculations and Indonesian authorities (excerpts from the referenced chapter).*

### 17.5 from 2012–16, with

### wpiea2019081 - 17.5 from 2012–16, with

### Bank performance and capitalization
- Average ROE over 2012–16: 17.5
- Lowest average ROE over that period: 12.6 percent for BTN.
- Banks’ average regulatory capital to risk-weighted assets ratio in 2016: slightly above 20 percent (IMF, 2017).
- BTN’s adequacy ratio: 8.9 percent.
- Around 75 percent of the four banks’ funding comes from deposits.
- Deposit funding implication: more stable source of funding than capital market funding but exposes banks to significant asset-liability mismatches.

### Key indicators for assessing non-financial public corporations (Box 1)
- Four key financial indicators used for high-level assessment:
  - Profitability
    - Return on equity: relationship between profit and equity; indicates whether company generates profits in line with commercial rates of return; for loss making companies, indicates how quickly equity is being eroded.
  - Solvency
    - Debt ratio: relationship of liabilities to assets; indicates solvency and degree of leverage.
    - Debt to EBITDA: relationship between debt and profit; indicates ability to service debt from operating cash flows.
  - Liquidity
    - Current ratio: relationship of current assets to current liabilities; indicates ability to meet short-term liabilities using short-term assets.
- Overall rating rule: calculated based on number of ratios rated in each category; if any indicator is rated black then the overall rating is black.
- Sources: Standard & Poor’s Rating Services (2013) Corporate Methodology and staff analysis.
- Indicator bands (as presented):
  - Return on equity: >15% | 8% - 15% | 0% - 8% | -10% - 0% | <-10%
  - Debt ratio: <30% | 30% - 50% | 50% - 80% | 80% - 100% | >100%
  - Debt to EBITDA: <1.5 | 1.5 - 2 | 2 - 3 | 3 - 5 | <5
  - Current ratio: >2 | 1.5% - 2 | 1.2 - 1.5 | 1 - 1.2 | <1

### Fiscal risk, monitoring, and macro-critical entities
- Fiscal risks associated with public corporations require close monitoring individually and in aggregate.
- Company financial statements support individual monitoring; public sector balance sheets support aggregate monitoring.
- Despite banks being rated as low risk, the large size of their outstanding liabilities relative to the economy necessitates close monitoring to manage and mitigate potential systemic risk to the economy and public sector financial health.
- Monitoring recommendation also applies to largest non-financial public corporations, particularly those that play a macro-critical role (example entities cited: PLN or Pertimina).

### Implicit financial costs of public corporations
- Definition: A public corporation reduces public wealth when its financial returns do not compensate for risks associated with its operations; implicit cost measured as difference between return comparable private companies generate and return generated by the public corporation.
- Causes of implicit costs include:
  - Non-commercial, quasi-fiscal activities undertaken without explicit subsidy.
  - Leakages due to weak governance or oversight.
  - Occupying public land rent free.
  - Inefficiency.
- Implicit costs are in addition to explicit subsidies.

### Measurement and trend of implicit costs (2010–16)
- Aggregate implicit cost methodology:
  - Annual total implicit cost = weighted average of annual implicit cost of each public corporation.
  - Annual implicit cost for each public corporation = difference between actual profit and profit if the corporation generated a return on equity equivalent to the return of the Jakarta Composite (stock) Index (JCI).
- Role of JCI: used as a proxy indicator of opportunity cost of holding equity in a public corporation.
- Trend: The implicit cost of Indonesia’s public corporations trended upward during 2010–16.
- 2015–2016: Aggregate implicit cost rose sharply in 2015 and 2016, driven in part by the revaluation of PLN assets in 2015.
- Sectoral dynamics: Rising implicit costs at PLN and Pertamina since 2012 have gradually overshadowed the annual net excess returns earned by the other public corporations.

### Key indicators for assessing public banks (Box 2)
- Four key financial indicators used for high-level assessment:
  - Profitability
    - Return on assets: indicates whether the bank is generating profits; for loss making companies, indicates how quickly assets are being eroded.
    - Bands: >10% | 5%-10% | 0%-5% | -5%-0% | <-5%
  - Capital adequacy
    - Capital adequacy ratio: indicates whether the bank is solvent and the extent of capital reserves to absorb losses.
    - Bands: >15% | 12%-15% | 10%-12% | 8%-10% | <8%
  - Quality of the loan portfolio
    - Nonperforming loan ratio: proportion of loan portfolio which is non-performing.
    - Bands: <1% | 1%-2% | 2%-5% | 5%-10% | >10%
  - Liquidity
    - Loan to deposit ratio: indicates reliance on deposits to make loans and exposure to sudden reduction of capital market liquidity.
    - Bands: >100% | 80%-100% | 60%-80% | 50%-60% | <50%
- Overall rating rule: calculated based on number of ratios rated in each category; if any indicator is rated black then the overall rating is black.
- Sources: Standard & Poor’s Rating Services (2011) Banks: Rating Methodology and Assumptions and staff analysis.

*Source: wpiea2019081 - 17.5 from 2012–16, with*

### conclusion is similar when comparing the 7-year average of the annual equity-weighted

### wpiea2019081 - conclusion is similar when comparing the 7-year average of the annual equity-weighted

### Public corporations performance and implicit costs
- From January 2010 until December 2016, Indonesia’s public corporations had an average ROE of 9.3 percent, well below the average return on the Jakarta Composite Index of 12.4 percent.
- Public corporations often attribute poor performance to quasi-fiscal activities (fiscal rather than commercial activities, e.g., selling electricity at below cost).
- Policy implications:
  - Explicitly fund non-commercial/quasi-fiscal activities from the budget so the government obtains a clearer picture of public corporations’ ability to generate adequate returns.
  - Funding quasi-fiscal activities from the budget ensures these costs are weighed against other spending priorities.
  - Addressing implicit costs can generate economy-wide efficiency gains and reduce unfair competitive advantages in markets where public corporations operate (power generation and distribution, construction, banking).

### Using the PSBS (Public Sector Balance Sheet) and intertemporal analysis
- The intertemporal PSBS framework combines the static balance sheet with the net present value of future public sector cash flows over a 50-year horizon beyond the static balance sheet year.
- Key baseline assumptions and projections:
  - Static PSBS evolution projected over 2017–23 using IMF staff projections from the April 2018 WEO database.
  - Financial- and non-financial public corporations (except Pertamina) assumed to evolve in line with nominal GDP.
  - Pertamina projections reflect April 2018 WEO oil and gas price projections and pro-forma forecasts.
  - Nominal GDP projections assume productivity increases and labor participation follow long-run averages, with changes in working age population under the UN’s medium fertility scenario driving changes.
  - WEO projection for the GDP deflator in 2023 of 3 percent is maintained through the long term.
  - General government revenue stabilizes at its 2023 level of 14.3 percent of GDP.
  - Discount rate for intertemporal component is based on the implicit effective nominal interest rate on general government debt from 2014–2017, which averaged 5.8 percent. This implies a long-run real interest rate under the baseline of 2.7 percent.

### Baseline intertemporal net worth and dynamics
- Indonesia’s public sector intertemporal net worth was slightly positive in 2016, but by 2023 is projected to turn negative.
- Drivers of deterioration:
  - A decrease in natural resource assets relative to GDP drives the projected deterioration to a negative 18.2 percent in 2023.
  - Projected investment by the general government is insufficient to stabilize fixed assets relative to GDP given a depreciation rate of 4 percent per annum (excluding land and oil and mineral reserves).
  - Present values of projected revenues and expenditures are several times larger than the stock of assets and liabilities on the static balance sheet in 2023.
- Historical context: primary balances turned negative in 2012 after being positive since at least the mid-1990s, due in large part to declining revenues from oil and gas.

### Sensitivity analysis of baseline intertemporal net worth (2023)
- Sensitivity to changes in level or annual growth rate of real GDP:
  - One-time 10 percent increase/decrease in the level of real GDP in 2024 → ± 27 (percent of baseline GDP) change in intertemporal net worth.
  - Increase/decrease in the annual growth rate of real GDP by 50 basis points → ± 50 (percent of baseline GDP) change in intertemporal net worth.
- Sensitivity to discount rate (implicit effective nominal interest rate on general government debt; 2001–17 average 5.8 percent, standard deviation 45 basis points):
  - Increase of one standard deviation in the discount rate → + 10 (percent of baseline GDP) change in intertemporal net worth.
  - Decrease of one standard deviation in the discount rate → - 11 (percent of baseline GDP) change in intertemporal net worth.

### Investment scenario: tax-financed public investment (authorities’ infrastructure plans)
- Context:
  - Authorities identified priority infrastructure projects with a total cost equivalent to 32 percent of GDP to be implemented by 2022.
  - General government plans to contribute a tenth of the cost, public corporations about another third, and the private sector the rest.
  - Indonesia’s general government revenue fell from about 19½ percent of GDP in 2008 to 14 percent of GDP in 2017; declining oil and gas revenue accounts for about 60 percent of the decrease.
  - Authorities are developing a medium-term revenue strategy (MTRS) to boost tax revenue.
- Model and key assumptions (IMF’s G20MOD output feeds PSBS):
  - General government tax revenues increase by 1 percent of GDP each year from 2019–21; cumulative permanent increase relative to baseline is 3 percent of GDP.
  - Additional tax revenue in 2019–21 finances general government investment; only two thirds of investment spending is assumed effective (investment efficiency = 0.67).
  - Monetary policy accommodates fiscal demand stimulus (policy rate unchanged), inducing a fall in real interest rates.
  - Public investment multiplier ranges between 1.2–1.4 in the first couple of years following incremental investment and fades to zero by 2025.
  - From 2022 onwards, permanently higher tax revenue finances additional health, pension, and education spending, except a small amount to offset depreciation of 4 percent per annum on the new capital stock.

### Effects of tax-financed investment on GDP and public sector wealth
- GDP impacts:
  - Level of real GDP rises by 2¾ percent in the short-term relative to the baseline and permanently by 1⅓ percent.
- Public sector balance sheet impacts:
  - Increase in tax-financed investment from 2019–21 leads to an increase in the general government capital stock of about 4 percent of GDP, and an increase in public sector net assets of the same amount.
  - Intertemporal component (present value of primary balances over 50 years) improves (becomes less negative) by about 6½ percent of GDP.
- Tabled scenario outcomes (changes from baseline, percent of baseline GDP unless otherwise noted):
  - Long-run level of real GDP (percent of baseline): Tax-financed investment, monetary policy accommodation → 1.3; Tax-financed investment with structural reforms → 2.2; Tax-financed investment, no accommodation → 0.5; Debt-financed investment, no accommodation → 1.0
  - Net assets (including capital stock): 4.2; 6.3; 3.1; -1.4
  - PV of primary balance: 2.2; 3.5; 1.2; 2.3
  - Net worth: 4/6.5; 9.7; 4.5; 0.9
  - Notes: 1/ Assumes investment efficiency of 0.67. 2/ Assumes full investment efficiency. 3/ Interest rate on general government debt adjusts with changes in policy rate, but assume no change in interest premia due to higher debt levels. Interest rates on debt return to baseline rate by 2028. 4/ Components do not sum to change in net worth due to rounding.

### Comparison of policy options and role of investment efficiency
- Tax-financed vs debt-financed investment:
  - Tax-financed investment with monetary policy accommodation yields a positive change in net worth of 6½ percent of GDP.
  - Under no monetary policy accommodation, tax-financed investment yields a positive change in net worth of 4.5 percent of GDP.
  - Debt-financed investment (no accommodation) yields about 1 percent of GDP change in net worth.
  - Debt financing creates liabilities that offset capital stock increases and tends to raise policy rates and interest payments, reducing net worth gains.
- Structural reforms to improve public investment efficiency:
  - If investment efficiency were perfect (full efficiency), Indonesia could add another 3 percentage points of GDP to intertemporal net worth and realize higher long-run GDP gains.
  - Countries with highly efficient public investment can get twice the economic return from their investment compared to the least efficient.

### Monetary policy sensitivity
- Monetary policy accommodation magnifies the GDP and net worth gains from tax-financed investment:
  - With accommodation (policy rate unchanged), permanent GDP increase is 1⅓ percent and net worth improvement is 6½ percent of GDP.
  - Without accommodation (policy rate raised to keep real interest rates unchanged), the level of real GDP increases about ½ percent over the baseline in both short and long run, and intertemporal net worth improvement is 4½ percent of GDP.
  - Under the no accommodation scenario, G20MOD projects the policy interest rate to increase an average of 60 basis points during 2019–21 and taper back to baseline by 2024.

### Conclusions and policy recommendations
- Indonesia’s public sector balance sheet is large but shrinking: public assets were 166 percent of GDP in 2016 with natural resources and public corporations as significant components.
- Public sector wealth was positive in 2016 but is projected to turn negative over the medium term as natural resources are depleted.
- Recommendations:
  - Use the public sector balance sheet approach to inform fiscal policy and capital allocation decisions.
  - For public corporations that earn below-market returns in commercial sectors, pursue governance and operational reforms to improve commercial viability.
  - Consider divestment where reforms fail: sell public stakes and use proceeds to pay down high-cost debt or invest in public goods with high social returns.
  - Structure public investments to improve balance sheet resilience (e.g., favoring more liquid portfolio investments over illiquid equity stakes where appropriate).
  - Implement a medium-term revenue strategy (MTRS) to raise tax revenue and finance priority infrastructure.
  - Improve public investment management to raise investment efficiency and magnify gains to GDP and public net worth.
- Key quantified outcomes:
  - A tax-financed public investment surge (with assumptions above) can generate about 6½ percent of GDP improvement in public sector net worth and a permanent increase in the level of real GDP of 1⅓ percent.
  - Investment efficiency improvements could add another 3 percentage points of GDP to intertemporal net worth in the best-case scenario.

*Source: IMF staff calculations; wpiea2019081.*

### REFERENCES

### REFERENCES

### Bibliographic citations
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- Amaglobeli, D., and W. Shi. 2016. “How to Assess Fiscal Implications of Demographic Shifts: A Granular Approach.” IMF How-To-Note 16/02, International Monetary Fund, Washington, DC.
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- Standard & Poor’s Rating Services. 2013. Corporate Methodology www.standardandpoors.com/ratingsdirect
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### Annex I — Mineral and energy resources: methodology of calculation
- Purpose: PSBS dataset follows GFSM 2014 valuation guidelines to estimate net present value of expected pre-tax cash flows from commercial exploitation of mineral and energy resources.
- Oil and gas valuation data sources:
  - (1.1) production over the lifetime of the asset, from the Rystad database (Rystad Energy 2018);
  - (1.2) prices (in US$) from WEO forecasts available at the end of the reference year;
  - (1.3) costs of production (in US$), from the Rystad database;
  - (1.4) exchange rates, from WEO forecasts available at the end of the reference year.
- Oil and gas valuation method:
  - Future US$ cash flows calculated over an 85-year horizon using sources 1.1–1.3.
  - US$ cash flows converted to domestic currency using WEO exchange rate forecasts (source 1.4).
  - Net present value calculated using a discount rate equal to average (2000–22) long-term (10-year) government bond yields in WEO plus a risk factor:
    - one percent for advanced economies,
    - three percent for emerging economies,
    - six percent for low-income developing countries.
  - When WEO government bonds unavailable, central bank policy rate plus 5 percent used.
- Coal, metals, and other minerals valuation data sources:
  - (2.1) estimates (in constant 2014 US$ prices), from the World Bank’s “The Changing Wealth of Nations 2018” report (Lange and others 2018);
  - (2.2) United States Geological Survey data on 2016 reserves and 2014–16 production by commodity and by country (Wilburn and others 2016), where available;
  - (2.3) prices (in US$) from WEO commodity prices for 2000–16;
  - (2.4) exchange rates, from the current vintage of WEO exchange rates.
- Coal/metals estimation method:
  - 2015 and 2016 estimates based on changes in reserves where reserve data available (source 2.2).
  - Where reserves data not available, assumption that value of stocks unchanged from 2014 onward.
  - Constant 2014 US$ estimates converted to current US$ using WEO commodity price index (source 2.3), then to domestic currency using WEO exchange rates (source 2.4).
- Ownership adjustments:
  - For countries where subsoil assets can be owned by units other than government, estimates pro-rated using country-specific indicators on ownership of land; such adjustments revealed in database documentation.
- Note on differences:
  - PSBS estimates differ from World Bank’s “The Changing Wealth of Nations 2018” because World Bank uses a discount rate of 4% for all countries and constant value data for prices, whereas PSBS uses different vintages of commodity-specific prices from WEO reports.

### Annex II — Table 1. 2016 Indonesia Public Sector Balance Sheet (Percent of GDP)
- Table headings: Government balance sheet columns — General Government; Non-Financial Public Corporations; Financial Public Corporations; Public Sector Consolidation; Total.
- Selected line items (values preserved exactly as in source):
  - Total assets: 123.8 | 26.3 | 39.6 | 165.6 | -24.1
  - Nonfinancial assets: 95.8 | 20.0 | 1.0 | 116.8 | 0.0
  - Fixed assets: 19.1 | 16.8 | 0.4 | 36.4 | 0.0
  - Land: 15.5 | 1.9 | 0.5 | 17.9 | 0.0
  - Mineral and energy resources: 60.2 | 0.0 | 0.0 | 60.2 | 0.0
  - Financial assets: 28.0 | 6.4 | 38.6 | 48.8 | -24.1
  - Currency and deposits: 3.6 | 2.7 | 4.4 | 8.4 | -2.4
  - Debt securities: 0.0 | 0.5 | 16.7 | 12.4 | -4.7
  - Loans (financial assets): 0.9 | 0.0 | 15.6 | 14.9 | -1.6
  - Equity and investment fund shares (financial assets): 20.2 | 0.2 | 0.2 | 6.4 | -14.3
  - Liabilities: 31.3 | 26.3 | 39.6 | 73.1 | -24.1
  - Debt securities (liabilities): 23.0 | 2.4 | 2.3 | 23.0 | -4.7
  - Loans (liabilities): 5.5 | 3.6 | 1.1 | 8.7 | -1.6
  - Currency and deposits (liabilities): 0.0 | 0.0 | 27.3 | 24.9 | -2.4
  - Equity and investment fund shares (liabilities): 0.0 | 14.4 | 5.8 | 6.0 | -14.3
  - Other accounts payable: 2.8 | 5.9 | 0.7 | 8.2 | -1.2
  - Net financial worth: -3.3 | -20.0 | -1.0 | -24.3 | 0.0
  - Net worth: 92.5 | 0.0 | 0.0 | 92.5 | 0.0

### Annex III — Table 1. Indonesia: Large Public Corporations—Select Financial Information (Financial year ending in 2016 unless otherwise noted)
- Memo: Nominal GDP (IDR - millions): 12,406,810
- Financial corporations (selected):
  - PT Bank Mandiri (Persero) Tbk (Bank Mandiri) — Sector: Banking — Assets: 8.37 — Equity: 1.24 — ROA (Financial): 2.2 — Loan/deposit: 82.5 — Capital adequacy: 14.8 — NPL ratio: 4.2
  - PT Bank Rakyat Indonesia (Persero) Tbk (BRI) — Assets: 8.09 — Equity: 1.18 — ROA: 3.1 — Loan/deposit: 84.9 — Capital adequacy: 14.6 — NPL ratio: 2.2
  - PT Bank Negara Indonesia (Persero) Tbk (BNI) — Assets: 4.86 — Equity: 0.72 — ROA: 2.1 — Loan/deposit: 86.5 — Capital adequacy: 14.8 — NPL ratio: 3.0
  - PT Bank Tabungan Negara (Persero) Tbk (BTN) — Assets: 1.73 — Equity: 0.15 — ROA: 1.1 — Loan/deposit: 101.5 — Capital adequacy: 8.9 — NPL ratio: 2.8
  - PT TASPEN (Persero) (Taspen) — Sector: Insurance — Assets: 0.26 — Equity: 0.24 — ROA: 0.1 — Loan/deposit: n/a — Capital adequacy: n/a — NPL ratio: n/a
  - Total financial: Assets: 23.3 — Equity: 3.5
- Nonfinancial corporations (selected ratios):
  - PT Perusahaan Listrik Negara (Persero) (PLN) — Electricity supply — Assets: 9.46 — Equity: 0.14 — ROE: -1.1 — Current ratio: 0.83 — Debt ratio: 44.7 — Debt/EBITDA: 4.6
  - PT Pertamina (Pertamina) — Oil and gas — Assets: 3.36 — Equity: 0.26 — ROE: 1.1 — Current ratio: 2.00 — Debt ratio: 114.0 — Debt/EBITDA: 29.3
  - PT Telekomunikasi Indonesia Tbk (Telkom) — Telecommunications — Assets: 1.06 — Equity: 0.00 — ROE: 26.3 — Current ratio: 1.20 — Debt ratio: 70.2 — Debt/EBITDA: 0.5
  - PT Pupuk Indonesia (Persero) (Pupuk) — Fertilizer — Assets: 0.62 — Equity: 0.00 — ROE: 14.6 — Current ratio: 1.17 — Debt ratio: 108.7 — Debt/EBITDA: 6.7
  - PT Perusahaan Gas Negara (Persero) Tbk (PGN) — Natural gas distribution — Assets: 0.51 — Equity: 0.03 — ROE: 23.7 — Current ratio: 2.61 — Debt ratio: 115.6 — Debt/EBITDA: 5.7
  - PT Krakatau Steel (Persero) Tbk (Krakatau Steel) — Steel — Assets: 0.32 — Equity: 0.00 — ROE: 3.8 — Current ratio: 0.81 — Debt ratio: 114.0 — Debt/EBITDA: loss
  - PT Garuda Indonesia (Persero) Tbk (Garuda Indonesia) — Aviation — Assets: 0.28 — Equity: 0.00 — ROE: -2.1 — Current ratio: 0.75 — Debt ratio: 270.1 — Debt/EBITDA: 24.9
  - PT Waskita Karya (Persero) (Waskita) — Construction — Assets: 0.20 — Equity: 0.05 — ROE: 13.4 — Current ratio: 1.17 — Debt ratio: 266.2 — Debt/EBITDA: 6.0
  - Total nonfinancial: Assets: 15.8 — Equity: 0.5
- Notes:
  - ROA = return on assets; ROE = return on equity.
  - Loan/deposit = ratio of client loans to client deposits; current ratio = ratio of current assets to current liabilities.
  - Capital adequacy = ratio of risk-weighted assets to total capital; debt ratio = total liabilities divided by total assets.
  - NPL ratio = non-performing loans divided by total loans; Debt/EBITDA = loans and borrowings divided by earnings before interest, tax, depreciation, and amortization.
- Sources: Company financial statements; IMF staff calculations.

### Annex IV — Table 1. Indonesia Public Sector Balance Sheet: Baseline Assumptions
- Time series columns include years and long-run horizons: 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2025 2030 2040 2050 2100
- Economy assumptions (percent change unless noted):
  - Real GDP: 5.0  4.9  5.0  5.1  5.3  5.5  5.6  5.6  5.6  5.6  3.0  2.8  2.4  2.0  2.0
    - MT: WEO scenario; LT: growth accounting
  - Nominal GDP: 10.7  9.1  7.6  9.5  9.0  9.0  9.4  9.2  8.9  8.8  6.1  5.9  5.4  5.1  5.0
    - MT: WEO scenario; LT: calculated
  - Non-oil: 11.7 11.3  9.2  8.7  8.6  10.3 10.2  9.6  9.3  9.1  6.1  5.9  5.4  5.1  5.0
    - MT: WEO scenario; LT: calculated
  - Oil: 0.5 -17.6 -16.4 26.7 16.7 -13.1 -8.3  -2.9  -1.2  -0.3  6.1  5.9  5.4  5.1  5.0
    - MT: WEO scenario; LT: calculated
  - Deflator: 5.4  4.0  2.5  4.2  3.5  3.3  3.6  3.4  3.1  3.0  3.0  3.0  3.0  3.0  3.0
    - MT: WEO scenario; LT: set at 2023 value
  - External demand: 3.7  2.2  2.4  6.4  5.6  5.7  5.0  4.4  4.1  3.9  3.9  3.9  3.9  3.9  3.9
    - MT: WEO scenario; LT: set at 2023 value
  - IDN/USD rate (average, + = depr): 13.9 12.9 -0.6  0.6  3.0  1.6  1.0  1.6  1.3  1.2  0.0  0.0  0.0  0.0  0.0
    - MT: WEO scenario; LT: assumed to be zero
  - WEO oil price (USD/barrel): -7.5 -47.2 -15.7 23.3 18.0 -6.5 -4.6 -2.7 -1.0  0.1  2.0  2.0  2.0  2.0  2.0
    - MT: WEO scenario; LT: assumed to be two percent
  - Indonesia oil price (USD/barrel): -8.3 -50.1 -16.6 19.5 20.9 -6.5 -4.6 -2.7 -1.0  0.1  2.0  2.0  2.0  2.0  2.0
    - MT: WEO scenario; LT: same as LT oil price assumption
  - WEO natural gas price: -3.0 -33.2 -34.5 16.4 11.7 -7.5 -4.0 -0.6 -0.8  1.2  2.0  2.0  2.0  2.0  2.0
    - MT: WEO scenario; LT: same as LT oil price assumption
  - Discount rate: 5.6  6.0  5.8  6.2  6.1  6.0  6.0  5.9  5.8  5.8  5.8  5.8  5.8  5.8  5.8
    - MT: WEO implicit rate (interest/gross debt); LT: average rate, 2014-16
- General government (percent of GDP) — Revenue and expenditure assumptions (selected lines preserved exactly):
  - Revenue: 16.5 14.9 14.3 14.0 14.2 14.1 14.0 14.1 14.2 14.3 14.3 14.3 14.3 14.3 14.3
    - MT: WEO scenario; LT: calculated
  - Non-SOE taxes: 11.6 11.5 11.1 10.7 10.8 10.9 10.9 11.1 11.1 11.3 11.3 11.3 11.3 11.3 11.3
    - MT: WEO scenario; LT: set at 2023 ratio
  - SOE taxes: 0.4  0.5  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4
    - MT and LT: GFSM 2016 amount multiplied by nominal GDP growth 1/
  - SOE dividend: 0.7  0.3  0.1  0.2  0.1  0.1  0.1  0.1  0.1  0.1  0.1  0.1  0.1  0.1  0.1
    - MT and LT: GFSM 2016 amount multiplied by nominal GDP growth 1/
  - SOE interest: 0.4  0.5  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4  0.4
    - MT and LT: GFSM 2016 amount multiplied by nominal GDP growth
  - Non-tax oil & gas (ex dividends): 2.1 0.7 0.4 ....................................
    - MT and LT: Receipts gradually return to 1/4 of oil GDP by 2024.
  - Other revenue: 1.3  1.5  1.9  1.8  1.7  1.6  1.5  1.5  1.5  1.4  1.4  1.4  1.4  1.4  1.4
    - MT: WEO scenario; LT: set at 2023 ratio
  - Expenditure: 18.6 17.5 16.8 16.5 16.7 16.6 16.5 16.6 16.7 16.8 16.9 17.4 18.7 20.4 21.3
    - MT: WEO scenario; LT: calculated
  - Health: ...  1.3  1.3  1.3  1.3  1.3  1.4  1.4  1.4  1.4  1.5  1.6  1.9  2.3  2.4
    - MT and LT: growth accounting from demographics template
  - Pension: ...  0.5  0.5  0.5  0.5  0.6  0.6  0.6  0.6  0.6  0.7  0.7  0.9  0.9  1.0
    - MT and LT: based on UN pop proj.; adjusted for existing pension liabilities
  - Interest: 1.3  1.4  1.5  1.6  1.6  1.6  1.6  1.7  1.7  1.7  1.8  2.1  3.0  4.2  5.0
    - MT: WEO scenario; LT: calculated using implicit rate at end 2023
  - Subsidies: 3.7  1.6  1.4  1.4  1.3  1.3  1.3  1.3  1.3  1.3  1.3  1.2  1.2  1.2  1.2
    - MT and LT: GFSM 2016 amount multiplied by nominal GDP growth 1/
  - Other current: 10.6  9.2  8.6  7.9  8.1  7.9  7.9  7.8  7.6  7.5  7.5  7.5  7.5  7.5  7.5
    - MT: WEO scenario; LT: set at 2023 ratio
  - Acquisition of NFAs: 3.1  3.6  3.6  3.8  3.7  3.8  3.8  3.9  4.1  4.3  4.3  4.3  4.3  4.3  4.3
    - MT: WEO scenario; LT: set at 2023 ratio; stock revalued by GDP deflator
  - Net lending/borrowing: -2.1 -2.6 -2.5 -2.5 -2.5 -2.5 -2.5 -2.5 -2.5 -2.5 -2.6 -3.1 -4.5 -6.1 -7.0
    - MT: WEO scenario; LT: calculated
  - Net acquisition of FA: 0.3  0.7  0.7  0.6  0.4  0.4  0.4  0.3  0.3  0.3  0.3  0.3  0.3  0.3  0.3
    - MT: WEO scenario; LT: set at 2023 ratio
  - Net incurrence of liabilities: 2.5  3.3  3.2  3.1  2.9  2.9  2.9  2.8  2.8  2.8  2.9  3.4  4.8  6.4  7.4
    - MT: WEO scenario; LT: calculated
- Memoranda:
  - (r-g) (percentage points): -5.1 -3.1 -1.9 -3.4 -2.9 -3.0 -3.4 -3.3 -3.1 -3.0 -0.3 -0.1  0.3  0.7  0.7
    - MT: WEO scenario; LT: calculated
  - Primary balance (percent of GDP): -0.9 -1.2 -1.0 -0.9 -0.9 -0.8 -0.8 -0.8 -0.8 -0.8 -0.9 -1.1 -1.5 -1.9 -2.1
    - MT: WEO scenario; LT: calculated
  - Oil GDP as a share of total GDP: 7.9  6.0  4.6  5.4  5.8  4.6  3.8  3.4  3.1  2.8  2.8 2.8 2.8 2.8 2.8
    - MT: WEO scenario; LT: set at 2023 ratio
- Footnote: 1/ Pertamina's taxes, dividends, and subsidies based on various operating and financial assumptions.

*Italic: Content unit wpiea2019081 - REFERENCES (source PDF: wpiea2019081 - REFERENCES).*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019081.pdf_