COVID-19 Increasing, Sri Mulyani's Subordinates: There Are Concerns About Budget Deficit Reduction Below 3 Percent In 2023

Director General of Budget Ministry of Finance Isa Rachmatarwata (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) said that social restrictions on a larger scale have the potential to have an impact on the projected budget deficit in the future.

The Director-General of Budget of the Ministry of Finance Isa Rachmatarwata said the spike in COVID-19 cases that occurred today must be controlled immediately. This is because the handling of the pandemic requires large state budget resources. This is of course contrary to the government's intention to immediately restore state finances.

"This broader societal restriction is becoming more challenging in making state expenditures more effective as well as its own challenge to reduce the budget deficit to below 3 percent by 2023," he said during a press conference on our State Budget which was broadcasted virtually, Monday, June 21.

According to Isa, the government continues to try to control the spread of COVID-19 in order to prevent greater use of the state budget.

"The government will continue to keep the pandemic from worrying, so we are also calmer to encourage the economy, control spending so that it can be more systematic to regulate and reduce the deficit to below 3 percent in the next two years," he said.

For information, in the 2021 State Budget (APBN), the government provides a health budget of Rp172.8 trillion which is included in the national economic recovery scheme. Until May 2021, the realization of the health budget was reported at Rp31.6 trillion or 18 percent of the provided ceiling.

Meanwhile, the budget deficit in the 2021 APBN is estimated to reach Rp1,006,4 trillion or 5.7 percent of gross domestic product (GDP). Then, for the draft 2022 state budget, the budget deficit will be in the range of 800 trillion or 4.5 percent of GDP.

It is important to note that prior to the pandemic, the budget deficit should not exceed 3 percent of GDP. The government and the DPR then agreed to issue Law (UU) No. 2 of 2020 concerning State Finances which provides room for widening the deficit above 3 percent. Meanwhile, the 2023 deficit target will be set at the level of 2.97 percent.