"Our financing needs in 2020 reached Rp1,654.3 trillion, or increased about Rp900 trillion, from the State Budget (APBN) of Rp741.8 trillion. We could construct two IKNs if I said this to the president," Sri Mulyani noted during the National Coordination Meeting (Rakornas) of COVID-19 Handling and National Economy Recovery in Jakarta on Thursday.
The minister explained that the significant increase in a year occurred, as state revenues were hit due to a halt in economic activity, while state spending surged significantly to help the community.
Mulyani said the implication is that the state budget deficit is designed to widen to Rp1,039.2 trillion, or 6.34 percent of the gross domestic product (GDP) in 2020, which must be financed by the government. Earlier, the state budget deficit was planned to be only Rp307.2 trillion, or 1.76 percent of the GDP.
Even the changes to the deficit target and planned financing needs were not only changed once amid the dynamic conditions of the pandemic at the time. However, in the end, she said, the realized deficit in 2020 had reached Rp947 trillion.
On the other hand, deficit financing is not easy to do, as the pandemic has also put pressure on the capital market and bond market, so a joint agreement was issued between the finance minister and the governor of Bank Indonesia (BI) to share the burden in financing the pandemic budget.
Hence, the minister did not deny that the COVID-19 pandemic had really changed the fiscal policy in Indonesia and made the state budget more flexible.
"But still in a pandemic situation, at that time, we provided whatever was needed to deal with COVID-19. In a pandemic situation, there is no reason not to take any action just because there is no money," Mulyani stated.
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Translator: Cindy Frishanti Octavia
Editor: Rahmad Nasution
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