Indef: The 2021 State Budget 'Needs Healing'

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - The impact of the COVID-19 pandemic has finally brought Indonesia's economy to the brink of recession. Economic growth in the second quarter of 2020 contracted by 5.32 percent, and in the third quarter minus 3.49 percent. This condition gives a signal that the economic recovery is underway.

Executive Director of the Institute for Development of Economics and Finance (INDEF) Tauhid Ahmad said, although there is already a trend of economic recovery, the 2021 national income and expenditure budget (APBN) still needs healing.

"This is due to several factors. First, state revenues in 2021 amounted to Rp1,473.6 trillion or decreased by minus 21.9 percent compared to before the pandemic," he said, in a virtual discussion, Monday, November 23.

Furthermore, Tauhid said that in 2021 it had not fully recovered even though there were improvements compared to Presidential Decree 72 of 2020.

"The pressure in 2020 will have implications in 2021," he explained.

Then, said Tauhid, state spending in 2021 which amounted to Rp2,750 trillion, an increase of 8.3 percent compared to before the pandemic. However, there was an increase of 0.39 percent compared to Presidential Decree 72 of 2020.

"But unfortunately, regional transfer spending is left in the phase of economic recovery where compared to before the pandemic was minus 7.2 percent (APBN 2020)," he said.

The 2021 APBN priority structure also includes a budget scheme that does not advance the economic recovery scenario in 2021. In fact, said Tauhid, the recovery scheme should still require a higher budget for economic, infrastructure and social functions.

"The budget deficit set in 2021 is 5.7 percent of GDP but the increase is very high, namely 227.6 percent compared to before the pandemic, although it is lower than the Presidential Decree 72 of 2020 which is minus 3.61 percent," he explained.