Indonesia economic contraction moderate: Finance Minister

Jakarta Indonesia’s economic contraction of 2.07 percent (year-on-year) in 2020 was relatively moderate compared to other G20 and ASEAN countries, Finance Minister Sri Mulyani Indrawati said.

“When we see Indonesia’s economic condition, it is relatively moderate compared to other G20 as well as ASEAN countries,” Indrawati observed during a leadership meeting of the Indonesian Military and Police (TNI-Polri) here on Monday.

This indicates that the government could handle the COVID-19 pandemic and reduce its impact, she said.

“Some countries are better than us, such as Vietnam, China, and South Korea, but most of the G20 countries and ASEAN experienced worse economic impact of the COVID-19 pandemic,” the minister stated.

The Indonesian government prioritized prudence in handling the pandemic, and this resulted in a moderate economic contraction and state budget deficit of 6 percent, which is relatively low compared to other countries where the figure has exceeded 10 percent, she pointed out.

A higher budget deficit indicates higher debt, she said, citing the example of the budget deficit in the US that has almost reached 15 percent and France, where it is pegged at 10.8 percent.

“This means that within a year, these countries’ debt has jumped more than 10 percent, while Indonesia could maintain it at a level of 6 percent,” she elaborated.

In many developed countries, the debt-to-Gross Domestic Product (GDP) has continued to rise, such as the US (103 percent of GDP), France (118 percent), Germany (72 percent), China (66 percent), and India (90 percent of GDP).

Indonesia has also recorded an increase in debt, with debt-to-GDP ratio at 38.5 percent, which is still in a prudent position, the minister noted.

In ASEAN, Malaysia has recorded a debt-to-GDP ratio of 66 percent, Singapore 131 percent, the Philippines 54.8 percent, and Thailand 50 percent.

“We expect Indonesia’s debt-to-GDP ratio to (reach) close to 40 percent, but once again, Indonesia is still in a position of relatively prudent,” Indrawati noted.

However, the government will continue with its efforts to recover the economy through budget expenditure and other instruments, including from the monetary sector, she added.

State budget expenditure is expected to reach Rp2,750 trillion, with ministries/institutions expenditure at Rp1,059 trillion, non-ministries/institutions Rp910 trillion, and transfers to regional governments Rp780 trillion.

 

Source: Antara News

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