Macroeconomic assumptions in 2021 draft state budget remain optimistic

 

Jakarta Macroeconomic assumptions in the 2021 draft state budget would remain optimistic but correspondingly realistic, given the expenditure requirements for priority programs and also the impact on widening the budget deficit, President Joko Widodo (Jokowi) stated.

During an online limited meeting from the Bogor Palace, West Java, on Tuesday, Jokowi noted that the priority program of the 2021 state budget would focus on expediting economic recovery and ushering in transformation in various sectors.

Furthermore, fiscal spending will be channeled to stimulate reform programs in the fields of health, food, energy, education, and also digitalization.

“The macroeconomic indicator figures must be carefully calculated, cautious, and optimistic but simultaneously realistic by taking into account the latest projections. We ensure that the priority program of the 2021 state budget and also the impact on widening the 2021 state budget deficit will be taken into consideration,” President Jokowi noted.

President Jokowi is upbeat about the economy recovering in 2021 and accelerating to return to normal growth. However, he did still point to likely global economic uncertainty next year.

Some world economic institutions, such as the International Monetary Fund (IMF), the World Bank, and the Organization for Economic Development Cooperation (OECD), project the global economy to return to growth trends in 2021 after contracting to a minus level in 2020.

“The IMF forecasts that the world economy will grow 5.4 percent. This is a very high estimate in my opinion. The World Bank estimates 4.2 percent, while the OECD projects 2.8 to 5.2 percent. I think if this estimate is correct, we are in an economic position that should also be above the world economic growth,” the president stated.

President Jokowi had earlier called for policy breakthroughs since budget realization for handling COVID-19 and the National Economic Recovery (PEN) had reached 19 percent, or Rp136 trillion of Rp695 trillion in the 2020 draft state budget (APBN-P).

“Absorption of the COVID-19 stimulus is yet not optimal, and the speed is still lacking,” the president stated during an online limited meeting from the Merdeka Palace, Jakarta, Monday, on directives to the Committee on Handling PEN and COVID-19.

The president called on the Committee of COVID-19 Handling Committee and National Economic Recovery to issue breakthrough steps to facilitate faster working.

“This to address the problem I had mentioned earlier of the budget absorption not yet being optimal,” the president pointed out.

Of the Rp136-trillion budget for handling COVID-19 and PEN that was realized, the head of state expounded that realization of the budget for social protection programs had reached 38 percent, while the realization of stimulus to Micro, Small, and Medium Enterprises (MSMEs) touched merely 25 percent. The realization of the recovery program at MSMEs included the placement of funds in four state banks to loosen liquidity.

Realization of the health management budget touched only seven percent, while realization of the budget for sectoral programs and local governments reached just 6.5 percent, and the realization of new business incentives at 13 percent.

 

Source: Antara News

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