Back To Being A Low-middle Income Country, Sri Mulyani's Subordinates: This Is The Consequence Of A Pandemic

Illustration of the queue for social assistance (Angga Nugraha/VOI)

JAKARTA - The Ministry of Finance (Kemenkeu) confirmed that Indonesia must re-enter the category of lower middle-income country due to the decline in per capita income caused by the COVID-19 pandemic.

This refers to a report released by the World Bank entitled World Bank Country Classifications by Income Level: 2021-2022.

In its information, the World Bank said that Indonesia's per capita income fell from 4,050 US dollars in 2019 to 3,870 US dollars in 2020.

Head of the Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu, revealed that the pandemic, which was the source of the health crisis, had a very deep impact on social life and global economic activity.

“The pandemic has created negative economic growth in almost all countries, including Indonesia. This is an unavoidable consequence,” he said in a written statement on Thursday, July 8.

In order to minimize the existing pressure, the government will continue to consistently roll out policies focused on efforts to deal with the pandemic, strengthening social protection, and support for the business world, including the National Economic Recovery (PEN) program.

"Through the hard work of the APBN and the PEN program, the government ensures that health care becomes a priority while maintaining public consumption during the pandemic," he said.

Furthermore, Febrio said that if the daily increase in COVID-19 cases that was currently happening would always be responded to, such as with stricter activity restrictions through the Emergency PPKM.

"This is done to put a brake on the rate of transmission and so that the daily additional cases can immediately decrease again. The 5M health protocol is strengthened, the readiness of health services and 3T is increased," he said.

To note, before the pandemic Indonesia was in a strong trend in economic growth and welfare. This is indicated by the relatively high economic growth rate consistently averaging 5.4 percent in recent years.

These conditions brought Indonesia into the category of upper middle-income country (UMIC), with per capita income reaching US$4,050 in 2019, or slightly above the minimum threshold of US$4,046.

For the record, based on World Bank estimates, the minimum threshold for a country to enter into UMIC this year rose to 4,096 US dollars.

“The pandemic still provides high uncertainty for the economy. Therefore, at this time the government will focus on taking various responsive steps so that the pandemic can be more controlled and the economic recovery steps can continue," closed Febrio.