The Government Is Excited About Building IKN, Does It Have Money?

Illustration (Photo: Instagram Nyoman_Nuarta)

JAKARTA - The plan to move the capital city has been finalized. The ratification of the State Capital Law (UU IKN) on Tuesday, January 18, 2022, is a legitimate political transaction between the government and parliament to realize the big plan.

The question is, does the government have the ability (funds) to realize the most important agenda for this republic?

According to the latest state financial report reflected in the 2021 State Budget, it is known that the revenue sector recorded a total of Rp. 2003.1 trillion. If examined, this number is 114.9 percent higher than the ceiling set at Rp1,743.6 trillion. Achievement? Clear. Last year's achievement was arguably a phenomenal achievement in the midst of the pressure of the COVID-19 pandemic.

Eits, but don't be happy just yet. The state's financial burden is no less big. This can be seen from the obligation to pay debts. Based on the January 2022 edition of our APBN report, the government's debt until the end of December 2021 was recorded at Rp. 6,908.87 trillion. This amount must be paid with a commitment to interest payments.

Just so you know, the Minister of Finance (Menkeu) Sri Mulyani had stated that in 2020 the government had paid debt interest of IDR 317 trillion for a debt value of IDR 6,080 trillion.

The state revenue sector in that period amounted to Rp.1,633.6 trillion. This means that about 20 percent of government funds in one year must be used to pay interest.

So what about 2021? With the debt burden rising to almost IDR 1,000 trillion in one year, it is almost certain that the interest payment burden will also skyrocket.

Assuming the interest expense has the same proportion, which is 20 percent, then only 80 percent of the state income, which was Rp. 2,000 trillion last year, remains, or Rp. 1,600 trillion.

Of that amount, around Rp750 trillion will be channeled to various regions in the form of Transfers to Regions and Village Funds (TKDD). As a result, the state's remaining income amounted to Rp. 850 trillion.

This amount is smaller than the existing ministry/institutional budget of around Rp945 trillion.

Indeed, in the allocation of spending in TKDD and ministries/agencies can target IKN development. However, the portion is quite small with the amount being distributed to various other government agencies.

This means that the government actually has a fairly narrow fiscal space to realize the discourse on IKN development, unless it is implemented in a business-to-business (b-to-b) manner without burdening the state budget. Hopefully so.