Sri Mulyani: 2023 Budget Must Stay Flexible in Facing Global Economic Turbulence

INDUSTRY.co.id - The Government has announced it is strengthening the country’s economic resilience through the 2023 State Revenue and Expenditure Budget Draft (RAPBN) amid the ongoing global economic uncertainty.

“We must design the 2023 State Budget that is able to maintain flexibility in handling economic turmoil, which we often call a “shock absorber”,” Minister of Finance Sri Mulyani said after a plenary session on Financial Notes and the 2023 RAPBN at the Presidential Palace, Jakarta, Thursday (8/8).

According to the Minister, President Jokowi has ordered his Cabinet to maintain the state budget in order to stay credible, sustainable, and quite robust.

In 2022, she said, the International Monetary Fund (IMF) revised down the economic forecast for Indonesia from 3.6 percent to 3.2 percent for the 2023 economy, while the global economic growth will continue to slow in the upcoming year.

“The economy will be in a weaker position from 3.6 percent to 2.9 percent by next year, meaning that our global environment will weaken, while inflation rises up,” she explained.

In 2022, the IMF, she added, also projected that the global inflation will increase by 6.6 percent in developed countries and 9.5 percent in developing countries.

The stubbornly high inflation in developed countries triggered a tightening of monetary and liquidity policies which spurs capital outflows and volatility in the financial sector, she added.

“We must continue managing these issues. Together with Governor of Bank Indonesia, we will continue formulating fiscal and monetary policies that are flexible yet at the same time effective and credible because this is a problem that combines both fiscal and monetary policies, as well as structural policies,” she said.

On that occasion, the Minister also pointed out the realization of the State Budget in the first semester of 2022, adding that Indonesia’s economic growth was already in a very good position and will continue to be maintained in the second semester of 2022.

“The economic growth in this year’s Q2 reached 5.44 percent. That was a very impressive growth since the baseline [last year’s Q2] reached 7.1 percent. Thus, the country’s economy can still grow above 5 percent,” she said, adding that the Indonesian economy has experienced the same condition as it was before the pandemic, including the GDP growth in 2021 and 2022 and the state budget deficit that is still relatively moderate.

“The growth of the state budget deficit must stand below 3 percent and its sustainability must be maintained as well as directed by the President. That way, we will see the growth from the side of state spending that will continue to support various national priorities,” she added.

The Minister also underscored that the strong national economic growth must be safeguarded through domestic supporting factors, such as consumption, investment, and government spending.

“The President has urged all ministries/institutions to stay focused on realizing government spending in 2022, especially for buying products that have high local contents, in this case, the Proudly Made in Indonesia campaign. All this measures are expected to support a more robust economic recovery in Q3 and Q4 amid a turbulent trend,” she remarked.