President Jokowi Orders Regions to Use Regional Budgets to Resist Inflation

Presiden Jokowi saat memberikan pengarahan dalam rapat pembahasan "Pengendalian Inflasi dengan Seluruh Kepala Daerah" yang dilakukan secara "hybrid" di Istana Negara Jakarta, Senin (12/9/2022). (ANTARA/Gilang Galiartha)

JAKARTA - President Joko Widodo ordered regional heads to use the regional revenue and expenditure budget (APBD) to contain the inflation rate due to the adjustment of the price of fuel oil (BBM).

"Therefore, I ask governors, regents, and mayors so that the regions and the central government work together as when we work simultaneously in overcoming COVID-19. below 5 percent", said President Joko Widodo at the State Palace in Jakarta as reported by ANTARA, Monday, September 12.

President Jokowi conveyed this in the "Inflation Control with All Regional Heads" Discussion Meeting which was carried out in a "hybrid" manner and was also attended by Vice President Ma'ruf Amin, Coordinating Minister for Economic Affairs Airlangga Hartarto, Minister of Finance Sri Mulyani Indrawati, Minister of State Secretary Pratikno, Cabinet Secretary Pramono Anung, and a number to the regions.

"I see the impact on inflation is estimated to increase by 1.8 percent and this is something we don't want", said the President.

President Jokowi said that the Minister of Finance and the Minister of Home Affairs had issued circulars to allocate the APBD to contain the inflation rate.

"There it is stated that 2 percent of the General Transfer Fund means the General Allocation Fund (DAU) then the Revenue Sharing Fund (DBH), this 2 percent can be used for subsidies to resolve the effects of fuel price adjustments", Jokowi added.

The Ministry of Finance has just issued the Minister of Finance Regulation Number 134/PMK.07/2022 concerning Mandatory Expenditures in the Context of Handling Inflation Impacts in 2022.

This regulation requires local governments to channel 2 percent of the General Transfer Fund (DTU) for social assistance. The social assistance is directed to motorcycle taxis, micro, small and medium enterprises (MSMEs), and fishermen to create jobs and provide subsidies for the public transport sector in the regions.

"Two percent, in the form of social assistance, especially for people who really need it, fishermen for example daily use diesel fuel, this can be helped by subsidizing them, motorcycle taxis for example also use fuel can be helped from this subsidy. MSMEs can also be assisted in purchasing raw materials that go up because yesterday there was an adjustment in fuel prices, and public transportation can be helped by increasing the tariff, what is the assistance, not the total assistance, but the increase in tariffs that occurs can be helped through subsidies", explained Jokowi.

President Jokowi said that 2 percent of the DTU funds could be used for unexpected spending.

"For example, there is an increase in egg prices, an increase in the price of shallots, and an increase in the price of garlic. This unexpected expenditure can be used to help with transportation costs, meaning, for example, the price of shallots increases, a lot of shallots come from Brebes, for example, this is Lampung province, then Brebes "How much does the transportation cost for Lampung? IDR 3 million, this is what the regional government covers for transportation costs of IDR 3 million", said the president.

This means the president said, the price that occurred in Brebes was the same as the price in the market.

"If that's all the regions do. We can contain inflation so it doesn't rise", said Jokowi.

This, he said, could be done for other commodities that experienced price increases, such as eggs.

"Local governments can buy laying hens directly from producers, for example, the center is in Blitar or Purwodadi or Bogor, can buy directly from the breeder and then sent to the market so that the price sold in the market is the price from the breeder because the transportation costs are borne by the regional government, provincial government, city government, and district government. The unexpected expenditure was diverted to social assistance to those affected due to the fuel price adjustment", said the President.