The design of the (state budget) 2021 is not firm, there is no design with a clear and focused blueprint to handle COVID-19 and the recession, its impact.
Jakarta (ANTARA) - A senior economist with the Institute for Development of Economics and Finance (Indef), Didin S Damanhuri, has opined that the 2021 draft state budget falls short on provisions for optimally boosting people’s purchasing power.
"The design of the (state budget) 2021 is not firm, there is no design with a clear and focused blueprint to handle COVID-19 and the recession, its impact," Damanhuri said at an online discussion here on Tuesday.


The government, he said, should focus on budget provisions for the health and social protection sectors as the impact of the COVID-19 pandemic may still be felt in 2021.


He pointed out that the budget allocation for the health sector in the 2021 national economic recovery (PEN) program has been lowered to Rp25 trillion from Rp87.55 trillion in 2020.


Whereas, the health budget should be increased, especially with the government's plan to conduct free mass vaccination for six months to combat COVID-19, which will need a large amount of funding, he stated.



The government has slashed the budget for the PEN program in the 2021 state budget draft to Rp356 trillion from Rp695.2 trillion. Meanwhile, the budget for social protection has been cut to Rp110.2 trillion from Rp203.9 trillion in 2020.



"This is not a firm budget design, with an ambitious economic growth (target set) at 5.5 percent. Clearly, it is far from boosting the purchasing power and recovering the MSMEs," he added.



He highlighted some budget posts for ministries and institutions that could be diverted to other sectors to boost purchasing power or to handle the COVID-19 pandemic.



Infrastructure budget, for instance, has been increased from Rp281.1 trillion to Rp414 trillion, although it has a less significant impact on economic growth, job opportunities, unemployment, and poverty eradication.



The budget for defense and security has been increased to Rp165.8 trillion, he said, while there is no prediction of a war, including in the South China Sea.



"Infrastructure budget of Rp414 trillion will not bring direct impact in a short term of five years, while (the budget) for defense and security is also far from the demand side," he added.



Earlier, at a working meeting with Commission XI of the House of Representatives, Finance Minister Sri Mulyani Indrawati had said the government plans to change the budget allocation for PEN 2021.

She did not provide further details on the plan, but said the change would be among others made for the extension of social assistance distribution. (INE)


Related news: Economy to not fully recover until 2021 first semester: Indrawati

Related news: Government sees tax receipts growing 5.5% in 2021

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Translator: Dewa Ketut SW, Sri Haryati
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