"The state budget is an instrument to maintain economic recovery and encourage structural reforms, because those are two very important things for Indonesia," she noted during a working meeting with the the House budget committee (Banggar) in Jakarta on Wednesday.
The government has designed next year's state budget to support recovery, which is expected to continue, because getting out of the crisis will not happen suddenly, but through efforts, she said.
Moreover, the banking sector has not been able to fully disburse credit as it did before COVID-19, so the State Budget will still be the main instrument for creating a sustainable recovery, she noted.
The recovery momentum will be continued by maintaining tax revenues, which are starting to improve, Indrawati said.
"If you want high growth, tax revenues must grow higher," she remarked.
"If the economic growth is 5 percent, the growth in tax revenue must be higher than 5 percent. This will lead to a better tax ratio," she added.
She said that an improved tax ratio was needed to meet the need for spending for recovery and structural reform.
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Tax revenue based on the Government Procurement of Goods and Services Agency (LKPP) reached Rp1,546.1 trillion in 2019 and Rp1,285.1 trillion in 2020,and this year, it is estimated to reach Rp1,375.8 trillion, and has been set at Rp1,506.9 trillion in the Draft 2022 State Budget (RAPBN), she informed.
Meanwhile, state spending will remain under control next year at Rp2,708.7 trillion , as per the Draft 2022 State Budget, or slightly higher than the prediction for this year's realization of Rp2,697.2 trillion, the minister noted.
"Expenditure growth is not pushed because the surge in spending has occurred in 2020 and 2021, while 2022 will be relatively leveling," she said.
The government is planning to change its spending strategy if COVID-19 cases are under control, from its initial focus on handling the pandemic such as vaccinations, protective equipment and medicines to productive spending, the minister added.
She also emphasized that fiscal consolidation efforts to maintain revenue growth and control spending will be aimed at creating a lower deficit of 4.85 percent of the gross domestic product (GDP) in 2022.
This deficit will later be met through budget financing, including with the help of the Joint Decree (SKB) III between Bank Indonesia (BI) and the government for dealing with the impact of the pandemic, she added.
"BI will assist in special financing for next year amounting to Rp240 trillion," the Finance Minister said.
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Translator: Astrid F, Azis Kurmala
Editor: Suharto
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