JAKARTA - Indonesia's President Joko Widodo on Monday proposed a $188 billion budget for 2022, a touch bigger than this year's spending outlook and with a narrowing fiscal deficit, as he set higher growth targets despite a resurgence of COVID-19 cases.

In his annual budget speech at parliament, Jokowi, as the president is popularly known, said next year's budget theme will be to accelerate the economic recovery from the COVID-19 pandemic and strengthen structural reforms, with controlling the coronavirus outbreak still a main focus.

The 2022 budget proposal, amounting to 2,708.7 trillion rupiah ($188.30 billion), was about 0.4% bigger than the 2,697.2 trillion rupiah the government expected to spend this year.

The 2022 economic growth target was set in a range of 5% to 5.5%, up from 2021's estimate of 3.7% to 4.5%.

"We will utilise all resources ... to control the pandemic. Therefore, the economic recovery and social welfare can be maintained, continue to be accelerated and strengthened," Jokowi said.

The proposal called for a budget deficit of 4.85% of GDP, compared with this year's revised deficit forecast of 5.82%.

The president said this meant the 2022 budget would serve as a foundation to bring fiscal deficit down to under 3% in 2023 to comply with current laws on the fiscal gap and debt ceiling.

Southeast Asia's largest economy pulled out of recession in the second quarter with a 7% annual GDP growth, but analysts warn the recovery faces a setback due to a resurgence in COVID-19 cases and mobility restrictions since early July.

The economy contracted for the first time since 1998 last year, by 2.1%.

The president proposed 255.3 trillion rupiah for health spending next year, including for improving testing, tracing and treatment of COVID-19 cases and vaccination.

The proposal also included 427.5 trillion rupiah allocation for welfare programmes and 384.8 trillion rupiah for infrastructure.

Jokowi targeted a 6% increase in revenues next year. He did not mention any specific tax measures in the speech, despite a separate, ongoing debate in parliament on proposals to raise the value added tax rate and introduce a carbon tax.

To fund the 2022 deficit, the government has proposed 991.3 trillion rupiah worth of bond issuance, excluding for refinancing, buybacks and short-term treasury notes.

Parliament is expected to vote on the budget in late September or early October. ($1 = 14,385.0000 rupiah)

(Additional reporting by Fransiska Nangoy and Stanley Widianto; Editing by Lincoln Feast.) ((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))