Indonesia Becomes Middle And Upper Income Country, Ministry Of Finance: Be Proud!

JAKARTA - The Indonesian Ministry of Finance revealed that amidst the efforts of the Government and the Indonesian people to struggle to overcome the impact of the COVID-19 pandemic and carry out a national economic recovery, a proud achievement was given by international institutions to Indonesia. As of July 1, 2020, the World Bank has upgraded Indonesia's status from a lower middle income country to an upper middle income country.

The increase in status was given after based on the latest World Bank assessment, Indonesia's gross national income (GNI) per capita in 2019 rose to US $ 4,050 from the previous position of US $ 3,840.

As is known, the World Bank classifies countries based on GNI per capita into 4 categories, namely: low income (1,035 US dollars), lower middle income (1,036-4,045 US dollars), upper middle income (4,046-12,535 US dollars), and high income (> 12,535 US dollars).

This category classification is commonly used internally by the World Bank, but is also widely referenced by international institutions and organizations in the operational guidelines. The World Bank uses this classification as a factor in determining a country to qualify for using World Bank facilities and products, including loan pricing.

Rahayu Puspasari, Head of the Communication and Information Services Bureau of the Ministry of Finance, in a written statement on Thursday, July 2, said that the increase in Indonesia's status was proof of Indonesia's economic resilience and sustainable growth that has been maintained in recent years.

"This is also the fruit of the hard work of the people and the Government of Indonesia in an effort to continue to promote inclusive, quality and sustainable economic growth," he said.

In addition, the government also continues to promote a series of structural reform policies focused on increasing economic competitiveness, especially aspects of human capital and productivity, industry capacity and capability to increase exports and reduce the current account deficit, and the use of the digital economy to encourage broad economic empowerment and equally.

"This status upgrade will further strengthen the trust and perception of investors, trading partners, bilateral partners and development partners on Indonesia's economic resilience. In turn, this status is expected to increase investment, improve current account performance, boost economic competitiveness and strengthen financial support," he explained.

He continued, this status increase is also a strategic step and a solid foundation for an advanced Indonesia in 2045. To become the fifth largest economy in the world, several policies need to be improved.

This includes strengthening human resources through education, health programs and social protection, building appropriate infrastructure to support mobility and encouraging development, enriching innovation and technology in responding to future industry challenges, improving service quality and increasing the efficiency of business processes and maintaining A healthy state budget is the key to success towards 2045 Advanced Indonesia.

Previously, the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan revealed that Indonesia had been named a country with middle to upper income by the World Bank.

"I would like to convey good news for us, that Indonesia was announced by the World Bank to have risen from a lower middle income country to an upper middle country," he said, at the launching of the 'Proud to be Made in Indonesia' campaign, Wednesday, July 1.

Luhut admitted that he was somewhat surprised by the news. This is because this new status was determined when the domestic economy was weak in the midst of the COVID-19 pandemic. So far, Indonesia's economic status determined by the World Bank is a country with lower middle income.

"I was also quite surprised to see this because it was announced at a time like this," he said.

It is known, Indonesia and the World Bank also continue to enhance cooperation through the framework of the Country Partnership Strategy. To deal with the impact of the COVID-19 pandemic, the World Bank provides financial support to Indonesia of 250 million US dollars or around IDR 3.62 trillion (exchange rate of IDR 14,500 per US dollar) which is packaged in the Indonesia COVID-19 Emergency Response program.

The funding is used to support Indonesia in reducing the risk of spread, increasing detection capabilities, and increasing response to the COVID-19 pandemic. This program will simultaneously support the strengthening of the national system for public health preparedness.