Reluctant To Continue To Rely On The State Budget, Sri Mulyani Has A Recipe For Anti-boncos Growth Spurts

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

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said the government had found a special formula to increase the economic growth rate without having to spend a larger budget. According to him, the main key in boosting growth is to increase macroeconomic productivity.

"The government assesses that due to COVID-19 productivity has dropped to minus 5 percent. So, if we want to increase economic recovery, it is not possible only in terms of increasing capital or adding more labor, but it must also be followed by an increase in productivity," he said while giving a presentation in a working meeting with Commission IX of the DPR RI at the Senayan Parliament Complex Jakarta, Wednesday, June 2nd.

The Minister of Finance added that if the government continues to mobilize the state budget to cope with the impact of the pandemic, it will result in a larger spending ratio which will lead to inefficiency in the use of the budget.

"If the state budget continues to be the main focus, then to grow just 1 percent, the capital must be doubled," he said.

In order to increase productivity, the government is now continuing to take several strategic steps, namely improving the quality of human resources (HR), creating better and more efficient infrastructure, as well as simplifying bureaucracy and regulations.

"These are three important things that are the focus of our reforms," he added.

Furthermore, the Minister of Finance explained that if it is successful in fixing the human resources, infrastructure, as well as bureaucracy and regulations, in the medium term economic growth will be supported by high investment and exports.

"If normally investment and exports are in the range of 5 percent, later when these three things are done the growth can be above 7 percent because we have high competitiveness. This is the importance of how productivity can lead to a better level of growth without causing wasteful capital so that it is more efficient and effective,” he said.

In addition, productivity is also believed to provide better welfare to the workforce through improved wages received.

For information, this year the government targets the economic growth rate to be at the level of 4.5 percent to 5.3 percent. Meanwhile, for the 2022 period, it is expected that the amount of growth will be in the range of 5.2 percent to 5.8 percent.

Meanwhile, the 2021 State Budget deficit is recorded at IDR 1,000 trillion or 5.7 percent of gross domestic product (GDP). Then the budget deficit in the 2021 RAPBN is projected to decrease to around 800 trillion or 4.5 percent of GDP.