Luckily, When The State Budget Became A Savior, Indonesia Became A Source Of Disaster.

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani explained that the government pays close attention to the flexibility of the preparation and budgeting of the state budget so that it can play a maximum role in holding back the shocks that are faced.

According to him, the design and implementation of the 2022 State Budget is concrete evidence in overcoming this turmoil. The reason is, when global energy commodity prices rise, the government does not immediately forward pressure to the community but reduces them through a strategy to add subsidies.

This was reflected when the government increased the subsidy budget and compensation last May to IDR 502 trillion from the previous IDR 152 trillion in the 2022 State Budget Law.

The government and the DPR at that time agreed to increase the allocation of subsidies and compensation three times. This is not a small number. If the state budget is not strong then it is impossible to perform its function as a carbon shock," he said at the UOB Economic Outlook 2023 forum on Thursday, September 29.

According to the Minister of Finance, the ability of Indonesian fiscal instruments to move agilely in reducing shocks cannot be separated from the windfall phenomenon obtained. It should be noted that apart from being an energy consumer, Indonesia is also listed as an important country for exporting global commodities, such as coal and palm oil.

So, when there is an increase in prices, state revenue sources are also raised. This is the reason why the state budget has a better space to be able to provide additional subsidies.

We are lucky that the state budget has become a carbon shock. In other countries, the state budget can even become a shock producer (cause of pressure)," he said.

The Minister of Finance explained that the conditions in question occurred in European countries which have been known to have a strong economy, namely the UK.

"This happened in England, the pound sterling exchange rate fell by 20 percent because the state budget was a shock producer or shock issuer," said the Minister of Finance.

For information, the current UK financial condition is suspected to be unable to balance the existing pressures. This can be seen from the turmoil in food and energy prices that cannot be suppressed by the government, causing inflation to become high.

As a result, this situation gives negative sentiment to the economy. Not to mention the steps taken by the British central bank to decide to raise interest rates in order to tame inflation. In fact, economic conditions are in pressure. So that the threat of recession and stagnation in the UK is increasingly inevitable.