The executive order, Regulation in Lieu of Law (Perppu) No. 1/2020, which is pending approval from the House of Representatives, allows the government to extend the state budget deficit beyond the legal cap of 3 percent of gross domestic product (GDP) and allocate the spending for programs related to COVID-19 without the approval of the House.

The spending will be declared as costs to save the country from the pandemic, and any officials executing the related policies “in good faith and according to the law” cannot be subject to criminal or civil charges.

Indonesian Democratic Party of Struggle (PDI-P) lawmaker Arteria Dahlan said the Perppu infringed on the House’s right to deliberate the state budget.

“The [Perppu] is to guarantee people’s welfare. But isn’t it trespassing constitutional rules [by granting sole authority over the budget] to the government?” he said on Wednesday during a hearing on coronavirus budget monitoring.

Arteria said the emergency response to the pandemic should not sacrifice government oversight.

Facing the unprecedented crisis caused by the SARS-CoV-2 virus, the government has imposed extraordinary measures to curb transmission. Aside from applying social and travel restrictions, the government has budgeted Rp 405.1 trillion (US$24.6 billion) for COVID-19 relief measures, Rp 150 trillion of which will be allocated to economic recovery while another Rp 110 trillion will fund social aid. About Rp 75 trillion will go to health care.

If the Perppu is passed by mid-year, the government will not have to propose an amendment to the 2020 state budget to the House to make the large amount of COVID-19 funding available before the end of this year.  

Lawmakers and antigraft activists have questioned the large allocation for economic recovery, as the government has also allocated large budgets for social assistance and support for industries.

A group of activists has submitted a judicial review petition to the Constitutional Court, demanding a review of Article 2 of the Perppu, which strengthens the government’s budget spending authority, and Article 27 on government officials’ impunity.

Read also: Angered by Perppu on pandemic response, civil groups turn to Constitutional Court Marwan Jafar, a lawmaker from the National Awakening Party (PKB), praised the Perppu for accelerating efforts to combat the virus but also noted that the government should abide by the Constitution, which mandated that amendments of the state budget be passed by the House.

“We must not allow a repeat of the BLBI [Bank Indonesia liquidity support] and Bank Century graft scandals that caused great state losses,” he said.

The BLBI and Bank Century bailouts are considered among the largest financial scandals in the country’s history, and saw government officials imprisoned after being implicated in embezzlement of budget funds.

In the BLBI case, BI provided liquidity support to commercial banks to restore public faith in banks as they suffered massive runs during the 1998 financial crisis, but most of the money was later found to have been embezzled.

In a verdict later overturned, former Indonesian Bank Restructuring Agency (IBRA) chairman Syafruddin Arysad Tumenggung was sentenced to 13 years for allegedly discharging Sjamsul Nursalim, the owner of Bank Dagang Negara Indonesia (BDNI), from the obligation to repay the government, reportedly causing Rp 4.58 trillion in state losses. He was acquitted by the Supreme Court last year.

The bailout of Bank Century (now Bank Mutiara) in 2008 turned into a political scandal with lawmakers questioning the ballooning cost of bailing out the bank, which amounted to Rp 6.76 trillion.

The House launched a legislative inquiry into the case in 2010 that almost led to former president Susilo Bambang Yudhoyono being impeached. Finance Minister Sri Mulyani Indrawati, who held the same position at that time, was forced to leave her post.

In July 2014, the Jakarta Corruption Court sentenced former BI deputy governor Budi Mulya, the first suspect in the case investigated by the Corruption Eradication Commission (KPK), to 10 years in prison. The investigation, however, has since moved at a snail’s pace.

Read also: Bail-in, not bailout banks KPK chief Firli Bahuri said the antigraft agency monitored the disbursement of COVID-19 funds by the central government and local administrations regardless of the Perppu. He warned officials that, under the Corruption Law, people convicted of graft during a natural disaster could receive a maximum penalty of death.

“We will conduct firm law enforcement,” he said during Wednesday’s hearing at the House.

Despite numerous natural disasters and public emergencies since 1999, the death penalty has not yet been handed down to a person convicted of such a crime.    

The finance minister’s special staff member Yustinus Prastowo said extending the budget deficit was the only way the government could fund the extraordinary policies taken during the pandemic. He dismissed concerns that the government would “go astray” with the budget deficit, as it would have to pay for it in the coming years.  

“The government will not commit suicide with the state budget. It will still report to the audit agencies,” Yustinus said.

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