The Jakarta Post
President Joko “Jokowi” Widodo has instructed his ministers to ensure that the government’s 2021 social aid budget is spent “as soon as possible” to stimulate domestic consumption during the global health crisis, Finance Minister Sri Mulyani Indrawati said on Tuesday.
The minister said the Finance Ministry had received budget execution lists (DIPA) so that the government could begin social aid spending in January 2021.
“As uncertainty remains high, we are asking government ministries to be more flexible and focus on social aid programs that are beneficial to the people,” she told reporters.
Next year’s state budget will be used for pandemic control efforts, vaccines, social aid and to fund regional administrations, Sri Mulyani said.
The government has budgeted Rp 2.75 quadrillion (US$185.19 billion) to nurse the virus-battered economy next year, as the country endures its first recession since the 1998 Asian financial crisis.
The economy shrank by 3.49 percent year-on-year (yoy) in the third quarter of this year, after falling by 5.32 percent in the previous quarter. Household spending, which accounts for more than half of the country’s gross domestic product (GDP), fell 4.04 percent in the third quarter amid spending slumps for transportation, restaurants and hotels.
A survey by Bank Indonesia (BI) has found that consumers remain pessimistic. The consumer confidence index dropped to 79 in October from 83.4 in September, reflecting growing pessimism about income and job opportunities as a result of the COVID-19 crisis.
The government was criticized by health experts, economists and businesspeople for its slow disbursement of COVID-19 relief funds in the early days of the pandemic.
It expects the economy to contract by between 0.6 and 1.7 percent this year, before rebounding to 5 percent growth next year, according to predictions in the 2021 State Budget Law.
“We are hoping for a strong recovery to provide job opportunities for people who are adversely affected by the pandemic in a bid to reduce unemployment and poverty,” Sri Mulyani said.
Some 2.67 million Indonesians have lost their jobs during the pandemic, according to Statistics Indonesia (BPS), bringing the unemployment rate to 7.07 percent in August, the highest level since 2011.
Some 1.63 million Indonesians fell into poverty in March, bringing the poverty rate to 9.78 percent, or 26.4 million people, from 9.22 percent in September 2019. More people are expected to fall into poverty this year as a result of the ongoing crisis.
Next year, the government expects to continue its development programs as it looks to raise Rp 1.74 quadrillion to fund infrastructure, health care and economic stimulus efforts, among other projects.
The state budget deficit is expected to reach Rp 1 quadrillion, or 5.7 percent of GDP, next year, lower than the estimated 6.34 percent of GDP this year, as the government expects to cut spending somewhat and collect slightly more tax revenue.
The state has allotted Rp 408 trillion for social protection programs next year, as well as Rp 169.7 trillion for health care and Rp 550 trillion for education.
So far, the government has only spent 62.1 percent of this year’s Rp 695.2 trillion COVID-19 stimulus budget. It expects to have spent 95.5 percent of the budget by the end of the year. It has spent 88.7 percent of the Rp 234.3 trillion allotted for social protection programs this year.
Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman Shinta Kamdani said recently that the government would need to continue providing stimulus next year to support businesses and households.
“Any cut in the stimulus could have a detrimental effect on economic recovery in 2021,” she said.