Sri Mulyani Reminds The Difference Between Developed And Developing Countries In Economic Recovery: This Is Indonesia's Challenge As G20 President

Minister of Finance, Sri Mulyani. (Irfan Meidianto/VOI)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani assessed that the process of economic recovery in the COVID-19 pandemic situation is quite unique. According to her, there is a difference in the conditions of recovery between countries that are classified as developed and countries that are categorized as developing or even poor.

"Developed countries seem to be recovering faster, while developing countries and poor countries seem to be lagging behind," she said through a virtual channel while giving a speech at the international conference On Resilient and Sustainable Economic Recovery, Thursday, November 11.

The Minister of Finance added that this difference created policy uniformity which often contradicted the interests of other countries in an effort to accelerate recovery.

“There is a very significant difference in policy creation, and this is what we are facing now. Some countries are already suffering from inflationary pressures and that has caused them to make policy adjustments. But on the other hand, many countries are also struggling to emerge from economic contraction, unemployment, and poverty," she said.

For this reason, the Minister of Finance assessed that Indonesia has an important role in encouraging policy alignment to jointly achieve the desired level of recovery. Moreover, Indonesia is included in the group of 20 of the world's largest economies and will carry out the mandate as President of the G20 in 2022.

“These are some examples of important cases that must be handled by Indonesia as the President of the G20. We must seek global coordination so that we can continue to strengthen in a situation where the recovery is uneven and requires different policy support," she stressed.

For information, countries that are members of the G20 account for 80 percent of the world's gross domestic product (GDP). Then, this group also accounts for 75 percent of global trade and also 60 percent of the world's population.

"So basically, the G20 has a very significant role and effect on the world economy. This group also has a big role in setting global standards to be able to produce policies that can solve global problems,” explained Minister of Finance Sri Mulyani.

As an illustration of the policy differences between developed and developing countries, it can be seen from the case of the United States (US) and Indonesia, which are both members of the G20.

The US has sent a signal to tighten liquidity (tapering), which was followed by an increase in interest rates by the central bank, The Federal Reserve (The Fed). This policy was adopted by the US with the assumption of a good domestic economic recovery and supported by controlled cases of COVID-19 and high vaccination levels.

Meanwhile, Indonesia and other emerging countries expect the Fed to delay raising the benchmark interest rate to ensure that foreign portfolio investment is maintained while continuing to undertake comprehensive economic recovery efforts.