The Jakarta Post
President Joko “Jokowi” Widodo aims to push the country’s economic recovery and structural reform amid the coronavirus-induced downturn in its proposed 2021 state budget draft.
Jokowi said the policy was taken as the country was expected to face abundant challenges next year, such as global economic uncertainty, commodity price volatility and financial sector instability, among other things.
“The 2021 state budget policy draft is being directed to accelerate economic recovery after the COVID-19 pandemic, to push for structural reform to boost productivity, innovation and economic competitiveness, to accelerate economic digital transformation and to make use of and anticipate demographic dynamics,” Jokowi said in his speech before the People’s Consultative Assembly (MPR) in Jakarta on Friday.
Indonesia’s economy shrank 5.32 percent in the second quarter this year as all components of economic activity fell significantly amid the coronavirus pandemic, which has infected more than 132,000 people and killed 6,000 in the country. The government expects the economy to contract 0.4 percent this year, or to grow 1 percent at best.
The government, Jokowi went on to say, aimed to continue “fundamental reform” in education, health care, social protection and budgeting and taxation.
It will spend more on priority programs next year namely food security, infrastructure development, technology development, education and health care.
State revenue is estimated to reach Rp 1.77 quadrillion (US$119.79 billion) next year while state expenditure is expected at Rp 2.74 quadrillion. Therefore, the budget deficit is set at Rp 971.2 trillion or 5.5 percent of gross domestic product (GDP) next year, compared with an estimated 6.34 percent of GDP this year.
The government expects the economy to grow between 4.5 and 5.5 percent next year, projecting the rupiah exchange rate to be around Rp 14,600 per United States dollar. The yield of the benchmark 10-year bond would be around 7.29 percent, while inflation is expected to hover at 3 percent.
Oil lifting in 2021 is expected at 705,000 barrels per day, while gas lifting is expected to be 1 million barrels of oil equivalent per day. The government expects the Indonesia Crude Price (ICP) to be around $45 per barrel.