The government must be more prudent in allocating spending and more careful in setting state revenue targets
Jakarta (ANTARA) - The Indonesian Employers' Association's (Apindo's) Economic Policy Analyst Committee Chairman, Ajib Hamdani, accentuated the need for the government to make the most of the limited fiscal space in 2023 to aggregate economic growth.

In 2023, the government should restore the state budget deficit (APBN) of a maximum of three percent of the gross domestic product (GDP).

"The government must be more prudent in allocating spending and more careful in setting state revenue targets," Hamdani remarked in an official statement, Thursday.

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The government should also be careful in managing the social conditions of society since in 2023, the political agenda has started to work, so social and political stability is deemed necessary, which is a prerequisite for investment to flow smoothly.

"The investment target of Rp1,400 trillion in 2023 is quite a challenging target when Indonesia enters the political stages ahead of the legislative and presidential elections,” he stated.

Weakening of the people's purchasing power should also be anticipated since the government may no longer be able to offer several direct cash assistance (BLT) programs allocated through the state budget.

"In fact, this purchasing power is the strength of public consumption and a significant support for Indonesia's GDP," he affirmed.

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Inflation also has the potential to rise higher than in 2022, thereby impacting the people's welfare and unemployment.

"The next challenge is the increase in interest rates that is quite high as a result of the increase in the benchmark interest rate carried out by BI," he remarked.

"From the production side, this will control the cost of funds that is an important part of the Cost of Goods Sold (HPP) and will add to the burden for consumer credit," he further noted.

The Coordinating Ministry for Economic Affairs was earlier optimistic that the economy would grow by around 4.5 to 5.3 percent in 2023.

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Translator: Katriana
Editor: Fardah Assegaf
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