The 2021 State Budget Law targeted Indonesia’s economic growth to rebound to 5 percent next year, Finance Minister Sri Mulyani Indrawati said on Tuesday. This will follow an expected economic contraction of 0.6 to 1.7 percent this year, the first since the 1998 Asian financial crisis.

“Economic growth in 2021 will be driven by gradual recovery in domestic consumption and we will push government spending to maintain people’s purchasing power amid the new normal,” she said. Controlling the pandemic will be the key factor to ensure growth, Sri Mulyani added.

“Investment will grow next year because of the base effect and an increase in development programs, while exports and imports will rise in line with global economic recovery.”

The government will prepare Rp 2.75 quadrillion  (US$185.19 billion) in state expenditure to fuel the virus-battered economy next year. It will continue its development programs as it looks to raise Rp 1.74 quadrillion in state income to fund spending on infrastructure, health care and stimulus, among other things.

On that basis, the state budget deficit is expected to reach Rp 1 quadrillion, or 5.7 percent of GDP, lower than the estimated 6.34 percent of GDP this year as the government will slightly cut its spending while at the same time slightly increasing revenue from taxes.

Uncertainty lingers

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