Even if we have a deficit, we may still owe, but it’s to save society and the economy
Jakarta (ANTARA) – Finance Minister Sri Mulyani Indrawati has said government debt is a step to save society and help the community thrive amid the COVID-19 pandemic crisis.
“Although we have a deficit, we may still owe, but it is to save the society and the economy,” the minister said during the CNBC Economic Outlook 2022 in Jakarta on Tuesday.
Indrawati explained that the debt step was taken due to the fact that the state budget was not sound.
The unhealthy state budget is caused by state revenues which have fallen by 18% as business and economic activities have come to a standstill due to mobility restrictions.
On the other hand, the government must meet the needs of people who face health threats and who are made redundant through government spending.
It was in this context that the government widened the deficit, starting from a maximum of 3% of gross domestic product, which was then allowed to exceed 3% according to Law No. 2 of 2020.
“That’s why we say our deficit can be more than 3%, and that’s still less than 60% of the total state debt allowed by the state budget law,” Indrawati said.
The minister said the results of the debt included the capacity of health facilities, including the provision of hospitals, the creation of places of isolation and the provision of PCR, protective equipment, ventilators and vaccines .
The government will then assume the costs for those affected by COVID-19 who require hospitalization.
The budget is about Rs 220 trillion, Indrawati noted.
In addition, the government provides social support in the form of the Family Hope Program (PKH), basic food aid, direct cash aid, aid to MSME actors, microcredit program (KUR), etc.
However, Indrawati said that as the economic recovery continues to strengthen, the debt will decline, as the government can repay the debt when state revenues start to rise.
Revenues, which had fallen 18% in 2020, started to climb more than 20% last year and until the second week of this year were already above 30%.
“We can get income when the economy recovers. That’s what we use to pay debts,” she said.
The minister assured that Indonesia’s debt was still quite low compared to G20 member countries, from India as an emerging country to the United States, including Britain, France and India. Germany as a developed country.
“As for 40% or 41% debt (Indonesia), advanced countries, such as the United States, France, England and Germany, are all already above 60% and even at above 100%,” she noted.
Government debt up to the end of January 2022 stood at Rp 6,919.15 trillion, an increase of Rp 10.28 trillion from the previous month or Rp 686.01 trillion from the same period Last year.
This nominal debt has increased, but the debt-to-GDP ratio has fallen to 39.36% from 41% in December 2021 or 40.28% in January 2021.