Proposed Macro Assumptions for 2021 State Budget Bill Remain Measurable But Expansive: Sri Mulyani

2021 Macroeconomic and Fiscal Policy

The Government has announced it will continue to implement consolidative fiscal policy but remain expansive in the process of economic recovery next year in the 2021 State Budget bill, Minister of Finance Sri Mulyani said.

According to her, macroeconomic basis used as a calculation for the 2021 State Budget are economic growth in the range of 4.5% – 5.5%, inflation at 3%, 10-year Government Securities (SBN) interest rate at 7.29%, exchange rate at Rp14,600 per US Dollar, crude oil price at US$45 per barrel, oil lifting at 705,000 barrels per day and gas lifting at 1,007,000 barrels per day.

“As for the 2021 State Budget, fiscal policy will be geared to rebuild the economy, strengthen structural reforms, namely various measures to improve the quality of human resources and boost investment,” she said during a working meeting between Minister of Finance, Minister of National Development Planning/the National Development Planning Agency (Bappenas) and Governor of central bank Bank Indonesia and the Budget Agency of the House of Representatives through a video conference on Tuesday (1/9).

In terms of State Budget reforms, she continued, it will be focused on both the central government and regional spending sides. As for state revenue, it includes taxes and taxation, as well as non-tax state revenues, she said.

The Government, she added, is also focusing on the development of human resources in health and education sectors, as well as from infrastructure development, particularly for information telecommunications, food security, social protection, and tourism development.

“The reflection is a reduction in the deficit compared to that of this year which is measurably done. There is still a sense of consolidation but still provides support for recovery in terms of state revenue, state spending and policies in financing that will be implemented to support economic recovery and reform,” she said.

The Minister also noted that from the perspective of the 5.5% deficit, there are indeed several things included as a decision to formulate the 2021 State Budget in a more supportive situation following high uncertainties due to the pandemic.

However, the Government, she continued, also gives a sense of fiscal consolidation so that next year’s deficit will remain lower than this year’s projection.

“The 2021 State revenue is estimated at Rp1,776.4 trillion comprising tax revenues of Rp1,4081.9 trillion, non-tax state revenues of Rp.293.5 trillion and grants of Rp0.9 trillion. For state expenditures, it is estimated at Rp2,747.5 trillion and central government spending at Rp1,951 trillion with transfers to the regions of Rp796.3 trillion, so deficit is at the level of Rp971.2 trillion or 5.5% of gross domestic product (GDP),” she said. (Ministry of Finance PR/EN)

Translator: Muhardi
Reviewed by: M. Ersan Pamungkas