President Susilo Bambang Yudhoyono has urged ministries and state agencies to start spending their budgets as early as possible to stimulate the economy, which is starting to recover from the global economic downturn.
“I ask all government officials to immediately carry out the 2010 working plan. I can say that all regulations on disbursement and procurement are ready. So, there is no reason to delay disbursements,” he said to government officials at the State Palace.
In 2009 there was a budget surplus of Rp 38 trillion (US$4.1 billion), which analysts said was the result of slow disbursements.
Usually ministries and state agencies spend most of their budget in the second half of the year.
Last year state expenditure reached above 95 percent of the target, which Coordinating Economic Minister Hatta Radjasa said was “relatively better” than the percentage achieved during 2008.
For 2010, Hatta said: “We want spending to be fast to open [up] economic activities, accelerating growth.”
Total state expenditure is set at Rp 1,047.67 trillion in the 2010 state budget.
Indonesia aims to achieve 5.5 percent growth this year, up from the estimated 4.3 to 4.4 percent achieved in 2009.
Bank BNI economist A. Tony Prasetiantono said ministries and state agencies should be more “agressive” in spending their budgets in the first half of 2010 so that budget disbursements would be made more evenly throughout the year.
He added that the government should spend the Rp 38 trillion of budget surplus remaining from 2009 on infrastructure projects.
“The government should change its orientation, do not expect too much from the private sector to build infrastructure. The government should be in the front line because infrastructure will provide multiplier effects to the economy, including job creation,” he said.
Yudhoyono said the government planned to cut the rate of unemployment and poverty to below 8 percent and 13 percent respectively this year. Indonesia had 231.83 million people as of August 2009, according to the Central Statistics Agency (BPS).
Latest BPS data showed the unemployment rate stood at 7.87 percent in August 2009 and the poverty rate at 14.15 percent in May 2009.
The banking and financial crisis last year hit global demand, which caused businesses to lay off workers as they had to cut production.
“The state budget strategy that needs to be implemented is to be expansive in creating jobs, and eventually purchasing power,” said Tony.
People’s purchasing power is a major factor affecting the economy. Private consumption drives 60 percent of the economy, according to the BPS.
Finance Minister Sri Mulyani Indrawati said demand in the first quarter of 2010 would remain strong.
Meanwhile, production will be supported by the harvest season in March and April, she said.
The government has also said it will prioritize the growth of the real sector to spur growth.
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