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Sustaining social protection during fiscal consolidation
The social protection budget has been credited with reducing poverty and protecting the poor from economic shocks.
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People in need: Residents of the Cibeunying Kidul area of Bandung bring home social assistance packages from the President on May 4. The assistance was part of the social protection program to mitigate the impact of the COVID-19 pandemic. (Antara/Raisan Al Farisi)
Social protection programs have been a quick response of the government during the pandemic to protect the poor and the other vulnerable groups from the devastating impact of the spread of COVID-19. The spending for social protection programs, which consist of three human-development-related programs (healthcare, social aid and education), has been the main feature in the government budget, especially during the pandemic.
Before the pandemic, the budget for these three programs made up 45 percent of the government expenditure. When we felt the pinch of the pandemic in 2020 and 2021, the spending soared to 70 percent and 63 percent of the total expenditure respectively. It was the surge in this spending that made the budget deficit plunge to 6.1 percent and 4.6 percent of the GDP, surpassing the 3 percent legal limit.
In the post-pandemic, as the government gradually decreases social aid programs, the expenditure is projected to decline to 53 percent of the total expenditure in 2022 and to 51.4 percent in 2023. Budget for education and healthcare is mandatory, together with the 3 percent GDP legal limit of deficits in 2023, and will restrict the government’s fiscal space. Total government expenditure in the 2023 budget is projected at Rp 3.04 quadrillion (US$200 billion), down 4 percent from 2022.
Education is crucial for enhancing the nation’s productivity and competitive strength, by mastering technology and labor competency.
Because the education budget has been large for several years, Indonesia has made remarkable strides in education and achieved almost universal education in primary education with significant growth in enrolment and access.
However, there is still a deficit in the quality of student learning and the output remains below the levels of other countries in the region. In the Program for International Student Assessment (PISA), a thrice-yearly survey by the Organisation for Economic Co-operation and Development (OECD), for students aged 15, the score of Indonesian students in math, science and reading was below 400 in 2018, lower than in other ASEAN countries.
