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THE INDONESIA’S Head of Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu said that the economy would be quite challenging in the future. The United States (US) and China continue to be tense not only about trade, but also other economic issues that pose a risk to Indonesia (RI).
“I see that the US State Revenue and Expenditure Budget deficit is still very high and is projected to reach 9% by the end of 2023. Meanwhile, the US wants to continue to encourage economic growth even though inflation is still high. On the other hand, China’s slowing economic performance this year has also become a concern for the world,” he said at the BNI Investor Daily event in Jakarta, Tuesday (10/24), 2023.
He explained, this is a risk, why? The impact of this is our external instability, where there has been a fairly high increase in interest rates and perhaps, they will continue to be higher, and perhaps for quite a long time.
However, Febrio emphasized that the government had anticipated this through the State Revenue and Revenue Budget (APBN) as an instrument to withstand shocks or a shock absorber.
Febrio gave an example, the State Revenue and Revenue Budget (APBN) plays an important role in responding to global pressures which also pose a risk to oil prices soaring to US$100 per barrel. In reality, that the APBN has proven that in the last 3 years, it has always been a shock absorber. However, from year to year the APBN is recorded to be getting healthier.
Febrio said this was evident from the controlled deficit from 6.1% in 2020, to 2.35% in 2022. Entering 2023, we saw in last June, the semester report, the outlook for a deficit of 2.3%, lower than the APBN assumption which was previously at 2.85%.
Previously, the Minister of Finance, Sri Mulyani Indrawati, said that the APBN was an important instrument for the Indonesian nation. He conveyed this in a Public Lecture entitled Fiscal Policy in the Midst of a Constellation of Global Uncertainty” which was held at the Diponegoro University Campus, Semarang, on Monday (10/23, 2023.
“One of the important instruments is the APBN, state finance, which is often referred to as fiscal policy, because it is one form of state instrument to achieve these goals,” said Sri Mulyani.
The Minister of Finance stated that Indonesia’s noble ideals as stated in the preamble to the 1945 Constitution certainly have consequences, especially in terms of state finances. Moreover, the dynamic and challenging global constellation also requires strong instruments so that the Indonesian economy can be managed to achieve its goals.
Therefore, Sri Mulyani explained that the APBN exists through three functions, namely allocation, distribution and stabilization, including being countercyclical.
“If the economy is too roaring then he tries to cool it down, if the economy is too down then he is pulled up. He uses tax instruments for income, as well as spending and financing. He can do it expansively; he can also do it contractively. That is all by design. in the APBN with the APBN posture,” concluded Sri Mulyani. [sources/photo special]
