So what caused this? Because Indonesia is bound by provisions that entrap itself, for example Law 2/2020 allows the Finance Ministry to sell its debt securities to BI with zero percent interest rate. This law is only valid for three years and it is estimated that in 2023 the state budget burden will be even heavier because the IMF has prohibited BI from providing loans with zero percent interest rate.
How can IMF do this? Because the law states that if BI wants to buy debt securities, the general interest rate will apply. “This means that neither BI nor the Finance Ministry are able to personify the state authority to issue money. The authority to issue money actually rests on BI, the Finance Ministry including the President, so actually the problem of constantly burdened budget does not need to happen. It proves that several regulations have trapped the Indonesian government in its own predicament due to interference from the IMF and the World Bank. Not many people speak about this,” said Noorsy.
“The management of state finances is heading towards the wrong direction, no longer a mismanagement. Mistakes are kept repeated. This financial management disorientation occurs because the economic system remains based on ultra-neoliberal economic system combined with ultra-capitalistic policy that always emphasizes debt. “The indicator is that actually we can make our own vaccines but we chose to import. So, the orientation of the policy is wrong, the interests of the policy are wrong, this is what lead to injustice. Who enjoys the most? Corporations, especially the financial industry,” he concluded. (des, eka)