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House of Representatives affirms 2021 State Budget anticipates COVID-19 challenges


IO – The 2021 Draft State Budget is validated in a recent RI’s House of Representatives (Dewan Perwakilan Rakyat – “DPR”)’ Plenary Meeting. Speaker of DPR RI Puan Maharani states that the 2021 State Budget is designed to comprehensively support the acceleration of the recovery of the national economy while anticipating a possible slowdown of the economy due to prolonged duration of the COVID-19 pandemic. “The Draft 2021 State Budget contains room for anticipating a possible slowdown of the economy,” Puan stated moments before she chaired the Plenary Meeting for Making the Decision on Draft Law concerning the State Budget for the Budget Year of 2021, also attended by Minister of Finance Sri Mulyani Indrawati, on Tuesday (29/09/2020). 

Puan stated that after the 2021 State Budget is validated, the Government must pay attention to the social aid budgets that must be allocated for the relief of citizens who are hardest-hit by COVID-19 impact. These social aids must be distributed according to the stipulated names and addresses of beneficiaries in the list. The Government must also evaluate previous distributions of social aids. Puan further requests that social aids are distributed in strict compliance with health protocols in order to prevent further spread of the Coronavirus. “Future distribution of social aid must be on target, and distribution in the field must be performed with strict compliance of health protocols. Even though the goods are properly distributed and received, if we fail to maintain COVID prevention protocol – if we generate crowds, generate long queues – it will all be useless. One problem solved, but others crop up quickly,” she said. 

Minister of Finance Sri Mulyani stated that social protection programs for the poor and most vulnerable to the impact of COVID-19 pandemic are crucial. In 2021, the Government will maintain various social protection programs, including the Kartu Sembako (Basic Necessity Card), PKH (Program Keluarga Harapan – “Hopeful Family Program”), Kartu Pra-kerja (“Pre-employment Card”), and Cash Social Aid. It will also improve the Social Welfare Integrated Data (Data Terpadu Kesejahteraan Sosial – “DTKS”) database in order to upgrade the accuracy of aid distribution among the people. “The Government is very grateful and appreciative of DPR RI’s support that allows us to continue formulating and implementing correct and measured State economic and financial measures, which in turn will help Indonesia go through this difficult trial,” she said before the Plenary Meeting. 

Sri Mulyani projects an increase of 0.2% in the 2021 State Budget deficit, thus becoming 5.7% in comparison with that of the previous year at 5.5%. This budget deficit increase is caused by possible decrease from the agreed-upon level of national income, which occurs simultaneously with increased spending. For now, State expenditures in Draft 2021 State Budget are increased IDR 2.5 trillion to IDR 2,750 trillion from a previous amount of IDR 2,747.5 trillion. On the other hand, State income decreases IDR 32.7 trillion to IDR 1,743.6 trillion from the previous IDR 1,776.4 trillion. “Therefore, changes in income have occurred, increasing the deficit rate by 0.2% of what the President has announced,” she said. 

Sri Mulyani further stated that the increased deficit will also cause changes in budget funding. The additional deficit funding at IDR 35.2 trillion will be paid through the issuance of National Securities (Surat Berharga Negara – “SBN”), or even from existing State cash reserves. “Funding changes thanks to increased deficit by 0.2% or IDR 35.2 trillion will be financed through the issuance of IDR 34.9 trillion in SBN, the use of Accumulated Budget Surplus (Sisa Anggaran Lebih – “SAL”) of IDR 15.8 trillion, and the addition taken from the reserve for educational expenditures at IDR 15.4 trillion,” she said. 

The Plenary Meeting agreed that the 2021 State expenditure will be IDR 2,750.02 trillion, with economic growth rate of 5%, inflation rate 3%, Rupiah exchange rate at IDR 14,600.00 per USD, SBN interest rate for 10 years at 7.29%, the price of Indonesian Crude Petroleum (ICP) at USD 45.00/barrel, petroleum lifting at 705,000 barrels/day, and natural gas lifting at 1 million barrels equal to petroleum/day. (dan) 


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