Sri Mulyani: Structural And Fiscal Reforms Determine The Success Of 2022

Minister of Finance, Sri Mulyani. (Photo: Instagram @smindrawati)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani Indrawati said the 2022 period was a very decisive year for the success of the foundations of consolidation and reform. This is because there are two very important reforms, namely structural reform and fiscal reform.

"I hope that all APBN budget and support in building human capital will be accompanied by reforms in the fields of education, health and social protection comprehensively using digital technology and the role of local governments," he said in a virtual 2021 National Development Planning Conference, Tuesday, 4. May.

Minister of Finance added, the role of local governments in education and health reform is very important. This is because these two functions have been delegated to the regions and the budgets for both are quite significant.

"Meanwhile, reforms in the field of social protection are needed so that the use of data is more accurate with the use of artificial intelligence and digital economy," he said.

Furthermore, structural reforms are also needed for economic transformation. This is done by increasing production capacity and sustainable growth as well as carrying out bureaucratic and regulatory reforms that are simpler, simpler, more responsive and faster.

Meanwhile, on the fiscal reform side, there are three pillars of state finance, namely taxation, budgeting and financing, which are the focus of reform.

"Taxation from the basic side and increased compliance, in terms of zero-based budgeting and priorities that are more efficient and synergistic and results-based, as well as financing that is increasingly prudent, innovative, and sustainable," explained the Minister of Finance.

Specifically, in terms of taxation, it is carried out in a competitive manner, including increasing the tax ratio, expanding the tax base to e-commerce, excise on plastics, and adjusting VAT rates.

Meanwhile, on the budgeting side, efficiency in spending on priority programs will be carried out, transformation of social assistance subsidies, effectiveness of social protection, and control over transfers to regions and village funds.

For information, the state revenue plan in the 2022 State Budget is estimated to be around IDR 1,823 trillion, with the expenditure sector stated at IDR 2,631 trillion. From this estimate, it is found that the budget deficit will be in the range of 800 trillion or the equivalent of 4.5 percent of GDP.

The difference in the budget will later be patched through the financing that is distributed by the government through bonds and other financial instruments.

"Financing will be managed carefully by paying attention to sustainable aspects," concluded Minister of Finance Sri Mulyani.