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COVID-19 resurgence poses risk to economy
Fiscal space needed to allocate budget funds to achieve 3% deficit target by 2023
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Medical workers prepare to administer the Covid-19 coronavirus vaccine during a drive-through vaccination service in Nusa Dua, Bali, on March 1. (Agence France Presse/Sonny Tumbelaka)
The Jakarta Post/Jakarta
Bringing the budget deficit back down to below 3 percent of the gross domestic product (GDP) may prove challenging for the government as efforts to contain the coronavirus could leave an ugly mark on the state balance sheet.
A surge in COVID-19 cases would lead to more people getting infected and filling up hospitals across Indonesia and may compel the government to tighten mobility restrictions.
Additional curbs would hurt business sales and could cause job losses, forcing the government to disburse more stimulus funds to buoy economic activity.
Increasing state expenditure, combined with plummeting tax income as the economy slows down, would swell the budget deficit. Keeping the deficit higher than planned for a prolonged time would see the state accumulate more debt.
The government has intensified efforts to test people for COVID-19 after millions of Indonesians decided to travel to their hometowns for traditional Idul Fitri get-togethers despite a travel ban.
