Recovery and the 2022 State Budget

KOMPAS/RADITYA HELABUMI

A quiet atmosphere in the shopping area in Masyestik, South Jakarta, during the implementation of level 4 community activity restrictions (PPKM), on Monday (2/8/2021)

The draft 2022 state budget prioritizes healthcare due to COVID-19 pandemic and structural reforms.

When delivering the draft 2022 state budget (RAPBN) and financial note before the House of Representatives on Monday (16/8/2021), President Joko “Jokowi” Widodo said the 2022 state budget must be anticipatory, responsive and flexible to respond to the uncertainties caused by the pandemic.

The 2022 fiscal policy bears the theme “Economic Recovery and Structural Reform”. Some of the main projections of the 2022 state budget are 5 to 5.5 percent gross domestic product (GDP) growth, 3 percent inflation rate and US$63 oil price per barrel.

Also read:

> The Divergence of Economic Recovery

> Recovery Challenges

In regard to state revenue, the government targeted Rp 1.84 quadrillion ($127.24 billion), with tax collection projected at Rp 1.5 quadrillion and nontax revenue projected at Rp 333.2 trillion. The government projected a budget deficit of 4.85 percent of GDP, which is relatively high as state spending accounts for 14.69 to 15.3 percent of GDP, while revenue is at around 10.18 to 10.44 percent.

The President mentioned the six focuses of the 2022 state budget, namely the health sector, social protection program, development of human resources, infrastructure development and technology adaptation, fiscal decentralization and budgeting reform. The target of the 2022 state budget is to reduce the open unemployment rate to 5.5 to 6.3 percent, poverty rate to between 8.5 and 9.0 percent, especially extreme poverty, as well as decreasing the Gini ratio to the range of 0.376 to 0.378. Meanwhile, the country\'s development index is targeted to improve to between 73.41 and 73.46.

AGUS SUPARTO

President Joko Widodo delivered a state speech and introduction to the 2022 RAPBN, Monday (16/8/2021).

The challenge in refocusing the 2022 state budget is for it to successfully control the pandemic, improve people’s welfare and reduce inequality through job creation and the improvement of qualified human resources. Social protection programs, therefore, should be more targeted and encourage growth at the local level. Likewise, assistance for micro, small and medium enterprises (MSMEs) is expected to encourage the emergence of strong and independent entrepreneurs.

Budget reallocation must be accompanied by periodic evaluations to assess its efficacy so that strategic activities in ministries and regions can continue to run.

The 2022 state budget provides an automatic budget reallocation mechanism to respond quickly to rapidly changing situations, such as another spike in COVID-19 cases. Budget reallocation must be accompanied by periodic evaluations to assess its efficacy so that strategic activities in ministries and regions can continue to run. In regard to state revenue, the challenge is to implement structural budgeting reform and explore new ways of collecting taxes while maintaining the principle of justice.

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> State Owned Enterprises’ Debts

> Provoking Spending

The below 10 percent tax revenue ratio also needs to be increased without making taxpayers worry about being targeted.

We are obliged to ensure that the 2022 state budget achieves its goals while preventing misuse, inefficiency and corruption. This is important because in 2023, the deficit rate must return to 3 percent, as stated in Law No. 2/2020 on state financing policies during a pandemic and ensuring healthy fiscal conditions.

(This article was translated by Camilia Adianti).