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View all search resultsCOVID-19 resurgence poses risk to economy
Fiscal space needed to allocate budget funds to achieve 3% deficit target by 2023
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ringing 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.
Indonesia has detected local infections of the variant B.1.617, which is known to have exacerbated the situation in India. At the same time, high case numbers in India have prompted authorities there to focus on domestic needs for vaccines and impose an embargo on exports of vaccines to countries including Indonesia.
Finance Ministry Budget Director General Isa Rachmatarwata said the government was doing its best to keep case numbers low, adding that it was important to create the fiscal space for the government to allocate budget funds in order to achieve the 3 percent deficit target by 2023.
