Sri Mulyani's Subordinates Claim That The Indonesian State Budget Is The Most Beautiful: No Country Dares To Guarantee 3 Years To Return To Normal

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, said that Indonesia is a country that is quite good at managing state finances (APBN) in a pandemic situation. According to him, this can be seen from the range of budget deficits that have occurred in the last two years.

"Many countries have counter-cyclical policies with fiscal deficits that are higher than ours, some even have double digits of up to 11 percent, 15 percent (of gross domestic product/GDP). Now, we keep it low with 6.1 percent for its realization in 2020", he said in a webinar, Friday, October 1.

Febrio added, this indicates that the government has the ability to maintain state financial instruments in a fairly healthy condition.

“This means that we know that we need (widening the budget deficit) but not recklessly. We maintain (State Budget) and we calculate correctly how much we need to manage this stability", he said.

Furthermore, the subordinate of the Minister of Finance, Sri Mulyani, said that if Indonesia was the only developing country (emerging country) that dared to provide certainty that the state's financial restructuring would be carried out within three years after the COVID-19 pandemic hit.

“Nothing in the rest of the world that I've heard of, emerging economies, whether it's India, Malaysia, Thailand, has promised to return to sound fiscal discipline within three years. Only Indonesia has done that", he said.

This condition is claimed by Febrio to provide its own advantages for Indonesia. The reason is that the ability to maintain state financial instruments is always credible but still able to protect the public makes Indonesia quite attractive in the eyes of capital owners.

"This promise, this commitment can be a signal to investors and the global market if the Indonesian government is very credible in managing state finances, and it will continue to make our market more attractive compared to other countries", explained Febrio.

For information, before the pandemic situation, the State Budget deficit was set to be below 3 percent of GDP. However, the need for budget soared quite high after the COVID-19 pandemic at the beginning of last year.

In response to this, the government and the House of Representatives agreed to widen the budget deficit above 3 percent as stated in Law No. 2 of 2020 concerning State Finance.

In 2020, the state budget recorded a deficit of 6.1 percent. Meanwhile, for the 2021 period, the government projects it will be 5.7 percent of GDP.

Meanwhile, for 2022, the planned fiscal deficit is believed to be 4.85 percent. Just so you know, Law No. 2/2020 also requires the government to bring the State Budget deficit to a level below 3 percent starting in 2023.

The budget deficit itself occurs due to the larger amount of state spending compared to the revenue sector. The difference is usually covered by the government by releasing state financing instruments, aka debt.