Sri Mulyani Reveals Indonesia's Fastest Fiscal Consolidation Weighted G20 And ASEAN Countries

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Antara)

Minister of Finance Sri Mulyani Indrawati revealed that the government succeeded in consolidating fiscal after the COVID-19 pandemic one year earlier than countries in the G20 and ASEAN.

"Fiscal consolidation in two years is one year faster than the initial estimate, including the shortest compared to many countries, both at the G20 and ASEAN, has resulted in a state budget deficit dropping below 3 percent of gross domestic product (GDP) in 2022," said the Submission of the Principles of Government Information on the Bill on Accountability for the Implementation of the State Budget for Fiscal Year 2023 at the 20th Plenary Meeting, Thursday, July 4.

Sri Mulyani conveyed that the extraordinary pandemic conditions require extraordinary APBN policies, where state revenues have decreased sharply due to the cessation of economic activities and the community, requiring the APBN to fund spending that has soared to deal with the COVID-19 pandemic and restore the economy.

Sri Mulyani explained, due to the COVID-19 pandemic, the deficit in the State Revenue and Expenditure Budget (APBN) had increased to 6.1 percent of GDP far above the maximum limit regulated by the State Finance Law by 3 percent of GDP.

According to Sri Mulyani, the precarious condition due to the pandemic has caused the state budget to work extraordinarily hard in the 2020-2021 period which was able to restore the Indonesian economy and at the same time be able to restore the health of the state budget.

"The Indonesian economy has recovered from a contraction of 2.07 percent in 2020 to be positive 3.7 percent in 2021 and continues to grow at 5.3 percent in 2022," he said.

Sri Mulyani explained, as a very important fiscal policy instrument that functions as a tool for stabilization, distribution, and allocation of the State Budget, the state is always present and reliable in dealing with many global and domestic shocks and uncertainties - such as the extraordinary and devastating COVID-19 pandemic.

"The government and the DPR continue to work together well in formulating and determining fiscal policies (APBN) so that they are able to respond and answer these extraordinary challenges," he added.

Sri Mulyani explained that after the pandemic, COVID-19 did not make the global economy automatically recover.

In 2023 there will be global economic turmoil.

"The 2023 state budget, which was designed in mid-2022, was marked by developments in global geopolitical conditions, especially the Russian war Ukraine," he said.

He said the disruption of global supply chains due to war had caused commodity price volatility, prolonged inflationary pressures in many countries, prompting an increase in global benchmark interest rates and causing turmoil in financial markets in most developing countries.

According to him, this condition has implications for weakening economic growth in many countries in 2023, especially the United States, Europe, and China.

"Various analyses and reports of international institutions also show serious challenges that will be faced in 2023, including potential crises that occur in a number of large countries," he said.