REPUBLIKA.CO.ID, JAKARTA - The National Economic Committee (KEN) said deficits in the country's state budget and current account balance should be compensated with its economic expansion.

"This has become paradoxical. We have double deficits, and at the same time we are facing economic slowdown," deputy chairman of KEN Raden Pardede said on Friday.

The budget deficit, which is covered with debts, should be used for development of productive sector, to sustain economic growth, according to Raden.

"We know that the budget deficit is caused by subsidy," he said.

He cited the budget for fuel subsidy set in the 2014 state budget is more than 240 trillion IDR as against the total state budget of 1,876 trillion IDR. The deficit of the revised 2014 state budget was 241.5 trillion IDR or 2.4 percent of the country's Gross Domestic Product.

He said the government should be quick in taking a monetary, fiscal and structural policy mix. He added, the monetary policy of raising the interest rate in 2013 did not succeed much in attracting investment or recovering capital account.

The investments flowing in to the country were dominated by portfolio investments, not real investment that they did not help much in improving the current account balance, he said.

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