Indonesian Budget Still at Surplus but Government Wary of Global Economic Risks

JAKARTADAILY.ID – Global daily cases of Covid-19 have again shown an increase after passing the peak of the Omicron wave. This is caused by the spread of the BA.2 variant which is a subvariant of Omicron. Nonetheless, domestic daily cases continued to decline.

Vaccination is the main instrument of pandemic control and continues to be accelerated to protect the public. Until March 27, 2022, the total vaccine dose 1 reaches 72.50 percent of the total domestic population; vaccine dose 2 reached 58.42 percent, and booster vaccines reached 7.39 percent of the total domestic population.

“Current conditions have begun to show a condition that is relatively well under control. We hope that in the next month the month of Ramadan will be entered, and there will also be Eid al-Fitr, we hope that the current Covid condition will still be well maintained and under control. Indonesia is currently still a country that is able to manage it effectively, with a decrease in domestic cases, both in terms of daily cases and death cases, with a relatively high increase in vaccinations," said Finance Minister Sri Mulyani Indrawati when speaking at a press conference on Budget. Our State Revenue and Expenditure (APBN) for March 2022, online.

Furthermore, Sri Mulyani said, global risks have increased, in particular, driven by the acceleration of the normalization of US monetary policy as well as geopolitical conflicts between Russia and Ukraine. This combination has led to increases in global commodity prices, particularly in the food and energy sectors, as well as rising inflation in several developed countries. This increased volatility in capital flows, exchange rates, and the financial sector, and accelerated the normalization of monetary policy.

Also read: Sri Mulyani Says The 11 Percent VAT Increase is Not Excessive

In Indonesia itself, the pace of economic recovery is maintained. Population mobility has increased again in line with the improvement in the Covid-19 condition. Leading indicators show growth, including the Consumer Confidence Index (IKK) which is above the optimistic level, an increase in the Retail Sales Index (IPR), and growth in industrial and business electricity consumption. Domestic financial market conditions were maintained relatively stable and resilient. This is inseparable from the support of strong economic fundamentals and continues to be in a recovery trend.

The state budget performance in February 2022 still recorded a surplus, income was still growing strongly. Going forward, income growth will be heading to a more normal level. State spending will continue to be encouraged to be more optimal. The government will remain vigilant and continue to monitor developments in global risk escalation in order to determine appropriate and effective policy responses.

Omicron Impact

Public optimism weakened slightly as Omicron cases increased in February. However, IKK is still at an optimistic level of 113.1. The increase in Omicron cases also has an impact on decreasing public demand for consumption. Seen in the realization of IPR in February which is estimated to increase by 14.5 percent (yoy), slightly weakening compared to January's growth (15.35 percent yoy).

The growth in industrial and business electricity consumption was high, indicating strong business activity, reaching 14.1 and 9.3 respectively. However, the level of public consumption increased again in early March in line with the decline in Covid-19 cases and is expected to increase further ahead of the month of Ramadan. In addition, early indicators of investment activity (PMTB) are still strong in early 2022. Cement consumption, sales of commercial cars, and sales of heavy equipment grew positively in February 2022, at 2.7 percent, 31.5 percent, and 146, respectively. 5 percent.

Also read: Omicron Spike Concerns Minister of Finance Sri Mulyani on Global Economy

The Trade Balance consistently recorded a surplus, reaching USD 3.83 billion in February 2022, supported by increased exports. This realization was supported by exports which grew 34.14 percent (yoy), supported by an increase in leading non-oil and gas exports, and the manufacturing sector which was still growing strongly. Furthermore, imports in February 2022 grew by 25.43 percent (yoy), dominated by input goods (raw materials and capital goods) reflecting the continued strengthening of production activities.

State Budget Installed Anticipatively

The economic recovery was able to encourage a fairly massive level of labor absorption in 2021. The social protection and poverty alleviation program in the APBN was effective in reducing the poverty rate back to the single-digit level of 9.71% as of September 2021, leading to the trend of improving people's welfare that has occurred in the pre-pandemic. Government policies will continue to consistently encourage inclusive growth by accelerating the recovery of welfare, especially in terms of more optimal employment and quality development of human resources.