Indonesian government expected the country's economy to expand by 6.4 percent next year with lower budget deficit and subsidy, President Susilo Bambang Yudhoyono said in Jakarta on Friday.

The projection is higher than the government target this year of 6.1 to 6.3 percent on weak global economy.

The IMF has forecast the global economy to expand by 3.8 percent in 2014, higher than its projection of 3.1 percent in 2013.

President Yudhoyono said that the country's budget deficit was expected to account for 1.49 percent of GDP next year, lower than this year's expectation of 2.38 percent.

Indonesia, an oil net-importer with huge oil subsidy, raised subsidized-fuel prices on May 22, which is expected to reduce oil consumption and importation.

Yudhoyono said that the government decreased the fuel subsidy next year by 3.4 percent to 336.2 trillion rupiah (32.35 billion U. S. dollar).

"This will give room for expansion of the economy," Yudhoyono said in his annual speech to the parliament ahead of anniversary of Independence Day on August 17.

The southeast Asia's largest economy's budget next year will stand at 1,662.5 trillion rupiah (159.98 billion US dollar), or 10.7 percent higher than that of 2013, Yudhoyono said.

He said that inflation was targeted at 4.5 percent.

Yudhoyono said that the government already decreased unemployment to 5.92 percent in March from 9.86 percent in 2004, and cut poverty to 11.3 percent in March from 16.66 percent in 2004 in the country with 238 million people.