Make Sure Social Assistance Is Well Disbursed

Kompas

Poverty Data in IndonesiaPercentage of poor population.

JAKARTA, KOMPAS – The national economic recovery program will be able to spur economic growth if it is carried sustainably and inclusively. With such a program, the rise in poverty and income inequality can be reduced to a minimum.

According to the latest data from Statistics Indonesia (BPS), the number of people classified as poor reached 26.42 million as of the end of March 2020. The number was an increase of an additional 1.63 million people from the figured recorded in September 2019. The country’s Gini ratio stood at 0.381 as of March, an uptick of 0.001 points from the level recorded in September 2019.

The Gini ratio, which ranges from 0 to 1, is an indicator that shows the income or wealth inequality in a country. The ratio, which is closer to 1, indicates widening inequality.

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The latest poverty and inequality data was recorded about one month after the first Covid-19 case was found in Indonesia on March 2. The poverty line in March was Rp 454,652 per capita per month.

In its report titled Indonesia Economic Prospects, July 2020: The long road to recovery published on Thursday, the World Bank estimates between 5.5 million and 8 million Indonesian people will fall into poverty by the end of this year due to the severe impact of the Covid-19 pandemic on the economy.

The World Bank’s managing director of development policy and partnerships, Mari Elka Pangestu, said that the increase in poverty due to Covid-19 had not only been experienced by Indonesia but also many other countries.

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KOMPAS/AGUS SUSANTO

Residential scavengers around Sumur Batu Final Disposal (TPA) in the City of Bekasi, West Java, Thursday (2/7/2020).

“The focus now is how to ensure the government can reduce the rise in the poverty rate to a minimum and to make sure the policy responses are interrelated so that inequality will not further widen," Mari said in a teleconference in Jakarta on Thursday.

The World Bank ‘s chief Economist for Indonesia, Frederico Gil Sander, said the stimulus packages initiated by the government would be effective in reducing the rising poverty and widening inequality if they were implemented properly.

The poverty rate is expected to decline again at the end of this year if the social assistance is well disbursed to the poor, Sander said.

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The government, through the Social Affairs Ministry, will extend the disbursement of social assistance until the end of this year from the initial schedule of September. The social assistance programs, such as the Family Hope Program (PKH) and Non-Cash Food Assistance (BPNT), have been distributed since April this year as part of mitigation efforts to reduce the impact of the Covid-19 pandemic on the poor. Other social assistance programs, which will be extended, also include the Sembako non-cash food assistance for 1.9 million families in Greater Jakarta and social cash assistance for 9 million in 503 regencies and municipalities outside Greater Jakaryta.

The secretary of the Social Affairs Ministry, Hartono Laras, said that the social assistances were distributed to help the people affected by Covid-19 as well as to maintain the purchasing power of the people and to revive rural economy.

The chairman of the National Development Planning Agency (Bappenas), Suharso Monoarfa, said on Thursday that government’s short-term goals were, among others, to ensure the financial stimulus packages especially the social assistance could be well disbursed and to maintain a positive growth in the economy. The government is hoping there will be a “V-shaped recovery”, in which the economy will recover quickly after suffering a sharp decline due to Covid-19.

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KOMPAS/RADITYA HELABUMI

Distribution of social assistance package stage 4 from the Provincial Government of DKI Jakarta to residents affected by Covid-19 at RW 06, Cipulir Sub-District, Kebayoran Lama, South Jakarta, Tuesday (30/6/2020)

Budget disbursement

Meanwhile Finance Minister Sri Mulyani Indrawati hoped the increase in the government’s budget allocation for social protection was expected to able to drive the country’s economic growth. According to her, the social protection program has covered 60 percent of the total population.

However, Sri Mulyani said such social protection programs will not bring a significant impact on the economy if their disbursement is low. If the disbursement is low, the people’s purchasing power will not improve and the economic wheel will not run, she added.

A number of ministers are involved in coping with the social impact of the Covid-19 pandemic. The Public Works and Public Housing Ministry and Villages, Disadvantaged Regions, and Transmigration Minister have launched labor-intensive projects in rural areas in order to reduce the unemployment. The program is also expected to maintain the people’s purchasing power.

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In Yogyakarta, the government also provides cash assistance to the poor to help improve people’s purchasing power so that the economy, which dropped 0.17 percent in the first quarter, 2020, could be revived.

"The recipients of the social assistance are encouraged to use the cash assistance for consumption so that it can help revive the economy, ," said the secretary of the Yogyakara special region, Kadarmanta Baskara Aji. (KRN/SON/CAS/APO/HRS)