Meanwhile, Institute for Development of Economics and Finance (INDEF) executive director Tauhid Ahmad said anticipatory steps are needed in the Budget to deal with global economic pressures as he feared the Ukraine war may disrupt the economic recovery momentum. “To prevent the macroeconomic and financial conditions from worsening, anticipatory steps are needed in the APBN,” he said in an INDEF-led public discussion on Tuesday (24/5).
He said in the 2022 Budget, the increase in subsidies and compensation was the reason behind the 357.1% increase in state expenditure which brought inflation down to below 4%. Another problem is the allotted government spending of Rp127.3 trillion, a hefty sum. “This shows that the 2022 Budget posture is a sick posture due to the compensation, so it must be corrected,” he said.
According to him, from 2022 to 2023 the government needs to reduce spending given that its contribution to GDP in Q1 was low. The 2022 Budget deficit must be reduced by cutting unproductive spending by ministries/agencies, targeted subsidies (fuel, electricity, 3-kg LPG).
“The government also needs to keep the exchange rate risk under control by gradually reducing capital outflow through tight monetary policy. In addition, the government must improve investment and financial governance, and it is necessary to deepen financial markets by reducing the number of short-term investors and resetting debt maturing in 2023- 2024,” he explained. (eka)