Ministry Of Finance: Government Decree Increases Energy Subsidies To IDR 551 Trillions So The Main Factors Keep Poverty Rate

Head of the Fiscal Policy Agency of the Ministry of Finance Febrio Kacaribu. (Photo: Doc. Antara)

Head of the Fiscal Policy Agency of the Ministry of Finance (Kemenkeu) Febrio Kacaribu said the government's decision to increase energy subsidies to Rp551 trillion was the main factor in maintaining poverty, as well as moving quickly to reduce food inflation.

The poverty rate in September 2022 was recorded at 9.57 percent or 26.36 million people below the poverty line. This poverty rate rose slightly from March 2022 at 9.54 percent, but lower than the poverty rate in September 2021 of 9.71 percent.

"The slight increase in the poverty rate in September 2022 is closely related to the increase in food inflation in the period June, July, August, and September, which had reached its peak at 11.5 percent in July 2022," said Febrio in an official statement, quoted from Antara, Tuesday, January 17.

He said that in 2022 the Indonesian economy was faced with inflationary pressures stemming from the increase in global commodity prices, particularly energy and food due to the war in Ukraine.

However, compared to many other countries, such as the United States and countries in Europe, which have set a record high in the last four decades, the increase in inflation in Indonesia is much more moderate.

This is mainly due to the crucial role of the State Revenue and Expenditure Budget (APBN) as a damper of turmoil aka the shock absorber of global inflation through energy subsidies mechanisms and the allocation of food price stabilization spending.

Meanwhile, Febrio added that the level of inequality in Indonesia's population expenditure or Gini ratio in September 2022 was recorded at 0.381, a decrease of 0.003 points from March 2022, which was 0.384, which was influenced by a decrease in in inequality in urban and rural areas, which decreased slightly by 0.001 respectively from the position in March 2022.

The government's efforts to encourage inclusiveness of economic growth can be seen from the decline in in inequality both in urban and rural areas. Even inequality in rural areas also continues to show improvement compared to pre-pandemic levels," he continued.

With inflation of food or volatile food which shows a significant downward trend from September 2022 which grew by 9 percent compared to the same period the previous year (year-on-year/yoy) until December 2022 by 5.6 percent (yoy). In the future, he estimates that the poverty rate can decrease again.

This is also supported by improving employment conditions, where the Labor Force Participation Level (TPAK) in August 2022 will increase to 68.63 percent, which will encourage an improvement in people's income.

"In the future, the government needs to maintain momentum for the decline in inflation and accelerate the realization of spending in the first quarter of 2023 to strengthen economic growth and reduce poverty," said Febrio.