"The draft state budget of 2019 is prepared not only to sustain the development momentum but also to forestall the impact of global economic turbulence," Sri Mulyani said in a hearing with the House of Representatives in a plenary session on the draft state budget here on Tuesday.
She said global economic environment is feared to continue to bring about negative sentiment in developing countries until 2019.
Currently, the impact of monetary normalization policy and increase in the fund rate of the US Central Bank, the Federal Reserve, and trade war between the world`s largest economies, the United States and China, have badly affected many countries, mainly developing countries, she said.
A number of countries having weak economic fundamentals and adopting economic policy not consistent with economic fundamentals have been beset by crisis such as Venezuela, Argentina, and Turkey.
Under such condition, state budget as an instrument of allocation, distribution and stabilization must run effectively to optimize economic performance, she told the lawmakers.
"The three functions have to be optimized that the economy will remain relatively stable and can adjust itself to new normal environment," she said.
In addition, Sri Mulyani also assured the lawmakers that the draft state budget of 2019 to be debated with the House had been designed healthily fare and self sustaining.
The health of the draft state budget of 2019 would continue to be maintained by reducing the budget deficit ratio and the primary balance deficit, she said.
She went on to say that justice is reflected through balance in physical and human resources development, in allocation of spending by the center and the regions and fair application of taxation systems, both as instrument of incentive for the people or for business development.
Self reliance is created by increasing the contribution of taxes to the state revenues and the use of instrument of decreasing debt financing, she said.
Altogether, the government, the monetary authority, and the Financial Service Authority will continue to coordinate in issuing policy to maintain stability and to face new challenges by reducing the vulnerability of Indonesian economy especially the current account deficit, she said. Reported by Satyagraha
Editing by Albert Saragih, Rahmat Nasution