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View all search resultsSense of crisis
It is very disappointing, however, to see little contribution from government spending to at least soften the hard blow from the pandemic to the nation’s economy.
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t comes as no surprise that Indonesia’s economy contracted in the second quarter of this year, although at minus 5.32 percent the rate is deeper than the government and economists had estimated and the weakest since the aftermath of the 1998 financial crisis.
Countries around the world from the United States and European countries to China and others in Asia are also seeing negative growth in gross domestic product (GDP). The International Monetary Fund (IMF) expects the global economy to contract 4.9 percent this year.
It is very disappointing, however, to see little contribution from government spending to at least soften the hard blow from the pandemic to the nation’s economy. Government spending may be the only part of the economy we can expect to contribute during this tough time.
The government has increased state spending by 7.9 percent to Rp 2.74 quadrillion (US$188 billion), including Rp 695.2 trillion to contain COVID-19, from Rp 2.54 quadrillion in the original 2020 state budget.
However, midway through the year, only 39 percent of the overall budget has been disbursed. Five months into the global pandemic, and four months until the end of the year, only a fifth of this year’s COVID-19 response budget has been disbursed as of Aug. 5.
Alas, government spending contracted 6.9 percent in the second quarter, a deeper contraction than consumer spending, which saw 5.51 percent negative growth.
The numbers are discouraging, especially considering the government’s quick responses and solutions in budgeting and financing to contain the pandemic, focusing on boosting the healthcare system, providing a social safety net and rescuing local businesses.
