Flooded With IDR 579 Trillion, 2.07 Percent Still Negative Growth, Will 2020 PEN Fund Be Effective?

JAKARTA - The contraction in economic growth in 2020 which reached minus 2.07 percent became the deepest score since the 1998 monetary crisis. In fact, the government, through the Ministry of Finance, has made fiscal intervention efforts to reduce the turbulence of economic deterioration.

It is recorded that the state has disbursed a budget of not less than IDR 579.9 trillion which is included in the 2020 National Economic Recovery Program (PEN). This figure is equivalent to 83.4 percent of the ceiling that has been prepared of IDR 695.2 trillion.

In practice, the use of the budget is distributed to six strategic posts. The first is the health sector, which absorbs Rp.63.51 trillion or 63.8 percent of the Rp99.5 trillion ceiling.

The second is the social protection aspect of Rp. 220.39 trillion or the equivalent of 95.73 percent of the total Rp. 230.31 trillion. For this sector, Minister of Finance Sri Mulyani even mentioned that social protection guarantees provided during the pandemic were able to reduce poverty by 8.9 percent from the predicted 10.9 percent.

The third is a matter of sectoral stimulus for both ministries / agencies and local governments amounting to IDR 66.5 trillion or 98.1 percent of the ceiling of IDR 67.86 trillion. This fund is intended to support the regional economy, particularly the tourism sector.

Then fourth, support for MSMEs totaling Rp. 112.4 trillion or the equivalent of 96.6 percent of the Rp. 116.3 trillion budget with the aim of providing capital assistance either through banking institutions or directly disbursing small business actors.

Furthermore, the fifth is financing support for corporate SOEs with a realization of 100 percent of Rp. 60.73 trillion. This budget targets strategic projects that concern the lives of many people.

The last one is related to the realized tax incentives of IDR 56.12 trillion or 46.53 percent of the total IDR 120.6 trillion.

In using the PEN, the government actually hopes that economic activity can move forward or at least survive the first year of the pandemic.

However, what was the actual condition that occurred during the past year according to the Central Statistics Agency (BPS)?

On Friday, February 5, the institution led by Suhariyanto said that the 2020 gross domestic product (GDP) at current prices was IDR 15,434.2 trillion IDR 56.9 million per capita.

If explained, the deepest economic pressure according to the field of business occurs in almost every sector, such as transportation minus 15.04 percent, accommodation minus 10.22 percent and services minus 5.4 percent.

Then, if you look at the growth in terms of expenditure, it is stated that 89.4 percent of 2020 GDP will come from household consumption and investment.

Meanwhile, household consumption expenditure contracted by minus 2.63 percent. This can be seen from the negative growth in retail sales, imports of consumer goods, and sales of motorcycles, which indicate the purchasing power of the people is low.

So, can the 2020 PEN fund be considered effective in supporting growth, especially the strategic household consumption sector as the backbone of gross domestic product?