Social Assistance Distribution When Emergency PPKM Is Overshadowed By A Short Budget, Will BI Be The Solution?

Illustration (Photo: Doc. Antara)

JAKARTA - The government has confirmed that it will accelerate the distribution of social assistance (bansos) in connection with the Implementation of Emergency Community Activity Restrictions (PPKM) on July 3-20.

This was conveyed directly by the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Panjaitan in a virtual press conference on Thursday, June 1.

"We have agreed to return to providing social assistance," he said.

Luhut admitted that he had coordinated with the Minister of Social Affairs, Minister of Finance, and Bank Indonesia to realize this intention. Meanwhile, the provision of social assistance itself is intended as a cushion for vulnerable people to be able to maintain purchasing power while keeping economic activities running.

So, what about the strength of the state budget in supporting the plan?

In an online press conference on our State Budget on June 21, the Minister of Finance (Menkeu) Sri Mulyani gave a signal that in the first six months of this year the absorption of the social protection budget was very fast, aka a lot of use.

"The social protection budget of Rp. 148 trillion this year has been realized quite large, namely Rp. 64.9 trillion or 43.8 percent," said the Minister of Finance.

To note, the social protection budget, which includes social assistance, is included in the national economic recovery fund (PEN) scheme with a ceiling of Rp 699.4 trillion.

Meanwhile, the overall 2021 APBN deficit is believed to reach IDR 1,006,4 trillion or 5.7 percent of gross domestic product (GDP).

The overdrawn state budget is met by financing (debt) which is distributed in various financial instruments, both domestic and foreign. One that absorbs in the local market is Bank Indonesia (BI).

The signal of BI's support for helping to accelerate the distribution of social assistance during the Emergency PPKM period was mentioned by Coordinating Minister Luhut as described above. Allegedly, the monetary authority will continue its accommodative policy by purchasing state securities (SBN) to support the capability of the state budget.

For information, until June 15, 2021, Bank Indonesia has bought up SBN in the primary market amounting to Rp116.26 trillion. This amount consists of Rp40.80 trillion through the main auction mechanism and Rp75.46 trillion through the Greenshoe Option (GSO) mechanism.

According to VOI records, BI's contribution in supporting the APBN continues to increase from the previous report on May 21, 2021, which amounted to Rp108.43 trillion.

Just so you know, Bank Indonesia cannot continue to 'finance' the APBN because it can lead to hyperinflation, namely the soaring price of goods due to a decrease in the value of the currency due to too much money in circulation.

Not to mention, if you look at the state revenue sector, which drastically decreased due to the main tax contribution which was quite depressed plus the burden of government debt. So, let's obey the health protocols together so we can get out of the current pandemic crisis.