The Government Must Dare To Stop Payment Of BLBI Recap Bonds

Legal observer, Hardjuno Wiwoho. (Photo: Special)

JAKARTA - Legal and development observer Hardjuno Wiwoho strongly criticized the government's plan to take controversial steps in the form of reducing energy subsidies and raising Value Added Tax (PPn) to 12 percent amidst the projected 2025 State Revenue and Expenditure Budget deficit (APBN) which reached Rp600 trillion. According to him, one option to save the state budget is to stop paying counterfeit bonds which have been burdening the state budget so far.

Hardjuno emphasized that the payment of BLBI recap bonds to large banks that have now proven to have made significant profits is a policy that is no longer relevant and actually detrimental to the people.

Every year, Rp50 trillion-Rp70 trillion from the APBN is allocated to pay these recap bonds. Meanwhile, the people are asked to bear the increase in VAT and the energy subsidies are cut. Where is the government taking sides?, "said Hardjuno, quoted Monday, December 2.

This doctoral candidate for Law and Development at Airlangga University explained that the government must have the courage to take progressive steps to stop paying BLBI recap bonds. He considered that this budget allocation was not in accordance with the principle of fiscal justice.

"It is better if funds of that size are diverted to energy subsidies or other programs that more directly touch the needs of the community," he said.

Hardjuno explained, if the government stops paying BLBI recap bonds, a budget of IDR 50-70 trillion per year can be used to close part of the state budget deficit without having to increase VAT or reduce energy subsidies.

"This step will not only ease the burden on the state budget, but also provide relief for the people who have been burdened by rising prices and inflation. The increase in VAT can be Rp. 100 trillion but the soaring prices of purchasing power are getting eroded, compared to the moratorium on paying BLBI recap interest," he said.

Hardjuno admitted that the decision to stop paying BLBI recap bonds requires great political courage. The reason is, this policy can cause resistance from parties who have been benefiting from recap bond payments.

"However, if the government really sides with the people, this is a step that must be taken. BLBI is a finished past, and the burden it will cause should not continue to be a legacy for future generations," said Hardjuno.

He also reminded that energy subsidies are a basic need for the small people, and the reduction of subsidies will only widen social inequality.

"Don't let the government choose an easy way by burdening the people through increasing PPn and reducing energy subsidies, while the heavy burden on BLBI is still allowed," he said.

If the government dares to stop paying BLBI recap bonds, Hardjuno is optimistic that this step will provide greater fiscal space for pro-people development programs.

"This decision is not only a matter of numbers, but also a matter of government alignment. Do you want to prioritize the interests of the people, or continue to submit to policies that are no longer relevant?," he said in a question tone.