Indonesia has been battered by COVID-19. (Photo: Indonesia Expat)The minister highlighted the extraordinary level of money that had been pouredinto the economy last year to anchor business activity and combat the pandemic,warning that the state budget had a limitation and could not act alone inrescuing the economy.
Indonesia needs reform to attract investment and mass vaccination to buildconfidence of speeding up domestic consumption recovery, she said, adding theeconomic recovery should not only depend on the state budget as it will not beenough to compensate for falls in consumption, investment and export activity.
The country’s budget deficit soared to a record 956.3 trillion IDR (68.6billion USD) last year as the COVID-19 pandemic fueled enormous governmentspending while tax revenue plunged as households and businesses struggled withthe pandemic-induced economic downturn. The deficit, which is equal to 6.09percent of the country’s GDP, and is also nearly three times as large as the348.7 trillion IDR deficit in the 2019 fiscal year.
As much as 2.58 quadrillion IDR was spent to fund development projects, combatthe pandemic, and provide relief for households and businesses in 2020, up 12.2percent year-on-year and accounting for 94 percent of the Government’s target.
On the other hand, the government collected 1.63quadrillion IDR in state income last year, a sharp drop of 16.7 percent year-on-yearand around 96 percent of the government’s target, as income from taxes plungeddue to slowing economic activity and the rollout of several tax stimuli.
The government issued 1.17 quadrillion IDR worth of sovereign debt papers lastyear, up 163.8 percent compared to the previous year, causing the governmentdebt to soar to 38 percent of GDP from 30 percent in 2019.
The finance minister added that as the recovery continued, the fiscal picturewould improve as people began spending more money and companies started toexpand operations.
The state budget deficit is expected to reach 1 quadrillion IDR in 2021, or 5.7percent of GDP, as the government prepares 2.75 quadrillion IDR in spending tofuel the virus-battered economy./.
VNA
