Remarks of President of the Republic of Indonesia during Plenary Cabinet Meeting on First Semester Report of the Implementation of the 2023 State Budget, at the Merdeka Palace, Jakarta, July 3, 2023

Bismillahirahmanirahim.

Assalamua’laikum warahmatullahi wabarakatuh,
Good morning,
May peace upon us,
Om Swastiastu.

Distinguished Vice President,
Distinguished Coordinating Ministers,
Distinguished Ladies and Gentlemen,

Today’s plenary cabinet meeting will discuss the first semester report of the implementation of the 2023 State Budget. We must be grateful for the country’s economic growth that remains relatively stable at above five percent for six consecutive quarters. As of July 2023, the World Bank has again incorporated Indonesia into the upper-middle-income country group. We have been through fast recovery process after being at the lower-middle-income country group in 2022 due to the pandemic.

However, the situation we are facing in the second half of 2023 is not easy. There are a few things to be aware of. They include an unstable global environment and current geopolitical tensions, which cause a significant impact on the economy and weak trade activities as shown by decreasing export activities. We must notice that several international institutions also predicted global economic slowdown. The International Monetary Fund (IMF) lowered its outlook [on global economic growth] at 2.8 percent, the World Bank at 2.1 percent, and the Organization for Economic Cooperation and Development (OECD) at 2.6 percent.

In addition, stay alert on global interest rates and high global inflation rates. If we look closer, the fragmentation of global trade has hampered multilateral cooperation, not to mention that early indicators for consumption and production showed a mixed situation. For instance, some grew at a fast pace, while some were at a slow pace. We must keep an eye on this matter.

To that end, I would like to highlight several points of note that deserve our concerns. First, we must focus on potential crises and must prioritize community as well as national interests. Do not let any government programs be hampered due to political competition.

Second, prepare anticipatory measures and forecast state revenues to achieve the target. This morning, Minister of Finance’s report shows that the state revenues in the first semester of 2023 remained stable. Based on the report, tax revenues are not higher than that of last year. Customs revenues and non-tax state revenues (PNBP) are also affected since commodity prices are lower than last year. We need to understand the risks and manage everything as best as we can.

Third, take several measures to improve the country’s economy in the second semester. What should we do? boost household consumption. When everything has been set, maintain the availability and prices of food ingredients. It is very important. Keep the inflation rate in the regions under control. Ensure investment achievement meets the target. These are the key. Regarding food sector, ensure the availability of fertilizer is right on target. And, maintain both monetary and banking sector stabilities, these are also essential.

Fourth, maximize the realization of the 2023 state budget and regional budget spending. Do prioritize goods and capital spending on domestic products. Ensure all social assistance programs are distributed on time and well-targeted. Do not lose focus on industry downstreaming, renewable energy infrastructure, and green economy. Do study and examine programs that have not been implemented in the state budget, [in particular] the causes and the follow-ups.

The most important thing, I need to underline this matter that we must be careful when it comes to the spending on goods for Ministry of Defense, the National Police, the State Intelligence Agency (BIN), and the Attorney General’s Office, considering that it involves a big amount of money worth Rp29.7 trillion. Meanwhile, the budget spending for roads, drainages, and dams stands at Rp23.5 trillion.

Why should I tell you this? Because the budget will definitely affect the maintenance and equipment. It definitely will. The maintenance budget at Ministry of Public Works is Rp14.9 trillion, including road and irrigation system maintenance. Meanwhile, maintenance budget at ministries/institutions amounting to Rp21.5 trillion has been used. Be careful. That should be fine if the purchased goods bring a wealth of benefits, otherwise we must oversee in detail the maintenance budget that increases up to Rp21.5 trillion. We must maintain the state budget to stay credible.

Fifth, anticipate potential long dry season due to El Nino. We’ve built thousands, more than five thousand, ponds, and 38 dams. [The target is] 61 dams will be completed by next year. However, water supply related-matters must be well managed. Also, take anticipatory measures on potential forest and land fires.

Sixth, please maintain political stability and public security in the 2024 election stages so the elections will run smoothly. Do constantly oversee non-judicial settlements of past gross human rights violations and carry out the restoration of security in Papua as quickly as possible, especially in Nduga regency, Intan Jaya, and other regencies.

That concludes my remarks.

I thank you.
Assalamu’alaikum warahmatullahi wabarakatuh.

(RIF/MMB)