The Ministry Of Finance Said Climate Change Could Cause 2.87 Percent Loss Of GDP

Rupiah (Photo: Unsplash)

BOGOR - The Ministry of Finance (Kemenkeu) expressed that climate change is a serious issue and must be handled by the state. Because otherwise, the state will suffer losses of up to 2.87 percent of gross domestic product (GDP).

Head of the Center for Climate Change Financing Policy and Multilateral of the Fiscal Policy Agency of the Ministry of Finance Boby Wahyu Hernawan said, to mitigate climate change, a budget of US$281 billion is needed. Meanwhile, adaptation of climate change requires a cost of around US$2.3 billion to US$12.14 billion.

"Adaptation actions require USD 2.3 billion to USD 12 billion to build resilience and capacity for us to adapt to reduce the risk of loss. If we can't, we will suffer a 2.87 percent loss from GDP," said Boby in the Ministry of Finance's media briefing, Wednesday, May 29.

Therefore, Boby said that to overcome climate change, moderate fiscal policies are needed to finance the needs of climate change, both from state revenues, funding, and financing.

Meanwhile, in terms of state revenues, Boby said that it must be directed to preserve natural resources (SDA), investment in new and renewable energy, energy transition.

"With fiscal tools, we use the tax facility to stimulate, for example, electric vehicle industry, tax facilities that are exempted or tax allowances, tax holidays, exemption from import duties, and others. The revenue from PNBP in the forest sector can be managed from state revenues," he explained.

In addition, Boby said the government continues to seek other sources of financing related to the environment, social, and culture.

For information, in an enhanced nationally determined contribution (NDC), the government targets a 32 percent reduction in emissions and with an international support target of 43.2 percent by 2030.