Gov’t to Maintain Fiscal Prudence in Next Year’s Budget: Finance Minister

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation     Date 16 Februari 2022
Category: News
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Minister of Finance Sri Mulyani delivers a statement after attending the Plenary Cabinet Meeting in Jakarta, Wednesday (02/16). (Photo by: PR of Cabinet Secretariat/Jay)

The Government has announced it will maintain fiscal prudence in the 2023 State Budget, considering the pandemic situation and uncertainty at the global level, Minister of Finance Sri Mulyani has said.

“We will draft the 2023 State Budget very prudently, taking into account the threat from the pandemic, which we hope will turn into endemic or normal level, and new challenges that we must be aware of,” the Minister said after attending the Plenary Cabinet Meeting in Jakarta, Wednesday (02/16).

The Cabinet Meeting, chaired by President Joko “Jokowi” Widodo, focused on three main issues, namely COVID-19 Handling; Government Work Plan for 2023; and Preliminary Draft of Macroeconomic Framework and Fiscal Policy Principles for 2023 Fiscal Year.

Regarding the economic recovery, the Minister said that Indonesia is one of the countries that has recovered relatively quickly. In five quarters, Indonesia’s Gross Domestic Product (GDP) has returned to the pre-pandemic leves, while many ASEAN countries and other developing countries in the world have not reached pre-COVID level yet.

Sri also explained that Indonesia’s macroeconomic policies in 2023 will continue to support recovery that does not only depend on the State Budget but also on various other sources of growth.

The Minister revealed that one of the sources of growth is the banking sector’s lending. The lending growth, she added, which has contracted last year, is now recovering and grow by 5.2 percent.

“We hope this growth will accelerate,” she said.

The Minister said that another source of growth is the capital market, because the Indonesian stock market value has reached Rp 7,231 trillion, with 3.77 percent growth, while the bond market value has reached Rp 4,718 trillion, with 9.65 percent growth.

For the record, in the Plenary Cabinet Meeting, President Jokowi has determined that the theme of the Government plan and Preliminary Draft of Macroeconomic Framework and Fiscal Policy Principles for 2023 would be “Increasing Productivity for Inclusive and Sustainable Economic Transformation”.

“Economic recovery must be based on high productivity. High productivity may only come from improvements in human resources, infrastructure, and the quality of the bureaucracy and regulations,” the Minister said.

Sri went on to say that the Government has also identified new centers or trends of economic growth in various aspects.

First, the new normal lifestyle after the pandemic, especially health sector.

Second, reforms in investment and trade.

Third, increasing awareness of the green economy.

“The State Budget will support those aspects in 2023, when we hope that economic growth will be in the range of 5.3 to 5.9 percent,” she said.

The Minister also said that the Government would pay attention to the global inflation, especially those occurring in the developed countries.

“[The Inflation] will have a spillover impact, namely capital flows, rising interest rates and also the impact on the yield of securities which will certainly add costs for the Government bonds,” she said.

The Minister further said that the rising inflation does not only happen in the developed countries, but also in a number of developing countries.

“High inflation will certainly threaten the economic recovery process because people’s purchasing power will decline. We must stay vigilant,” she remarked. (TGH/UN) (RI/MUR)

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