Overcoming Climate Change, Sri Mulyani Reveals That Concrete Financing Plans Are Needed

Minister of Finance (Menkeu) Sri Mulyani Indrawati said that currently Indonesia continues to show stable growth with the poverty rate continuing to decline.

However, Sri Mulyani argues that how to improve welfare without damaging the earth due to the issue of climate change, geopolitical, and digitalization is a challenge that the current government is concerned about.

"Climate change is a problem. How can we work together, especially between generations to generations," he said in his official statement, Tuesday, November 28.

Sri Mulyani also revealed that eradicating climate problems requires concrete financing plans. In this case, in addition to financing from the central government, state spending through local governments also plays an important role.

We carry out various policy and motivational instruments for local government. We use instruments such as in the physical Special Allocation Fund (DAK), Revenue Sharing Fund (DBH) and various instruments to motivate regions to stream climate change," he explained.

To fulfill this, the government is developing a number of fiscal and financial instruments to deal with climate change. One of them is in the form of green bond instruments combined with SUKK or sharia-based bonds.

Since 2018, Indonesia has published a total of 5 billion US dollars in SUKUK Green Bond globally. Meanwhile, domestically, the government also introduced retail-domestic green SUKUK whose issuance reached IDR 21.8 trillion. Sri Mulyani explained that the various instruments proved successful in reducing Indonesian emissions.

"The launch of this instrument is accountable for explaining green related instruments with decreasing emissions. A total of 5.7 million tons of Co2 in 2018, 3.2 million tons of Co2 in 2019, 1.4 million tons of Co2 in 2020, and 222,647 million tons of Co2 in 2022. This is not based on our own calculations, but is audited by credible institutions," he said.

In addition, the government is also holding integrated funding cooperation that supports infrastructure development in line with the achievement of sustainable development goals (SDGs) in Indonesia, namely SDG Indonesia One.

Meanwhile, in other efforts, Indonesia has received financial support from a number of countries or green climate funds (GCF) to carry out various energy transition projects. Based on data from the GCF Financial Instrument, there is a total of 486 million US dollars in budgets that have entered Indonesia which are divided into 23 percent equity, 26 percent are loan funds, and 35 percent are grant funds.

Untuk itu, kami akan terus bekerja sama dan membuka diri. Karena climate agenda without financing hanya akan menjadi agenda, hanya akan menjadi dream. Financing is one of the most critical elements dari climate agenda, tandasnya.