Dion Bisara, Lenny Tristia Tambun, Jakarta – President Joko "Jokowi" Widodo has proposed an expansive state budget next year with a deficit of 5.5 percent of Indonesia's output as he seeks to accelerate recovery with spending on the country's digital infrastructure, healthcare, and food security.
The president latest budget bill set a record spending at Rp 2,748 trillion ($186 billion) and revenue at Rp 1,776 trillion, increasing 6.5 percent and 1 percent, respectively, from this year.That resulted in a deficit of Rp 971 trillion or 5.5 percent of the country's gross domestic product (GDP). This year, the government set a budget deficit at a record 6.3 percent of GDP as the Covid-19 pandemic undermined tax revenue and raised spending for economic stimulus.
Jokowi said the impact of the pandemic would last until next year, and Indonesia must prepare to spend more to reinvigorate the economy. The government target growth to be between 4.5 percent and 5.5 percent next year, up from an estimated contraction of 1.1 percent to 0.2 percent growth this year.
"The Covid-19 pandemic shows that the availability of functioning digital infrastructure is important and strategic," Jokowi said when submitting the 2021 state budget bill to the House of Representatives on Friday.
"Therefore, infrastructure spending aimed at strengthening digital infrastructure and drive logistical efficiency and connectivity," he said.
Next year, the government earmarked Rp 414 trillion for infrastructure, which includes digital and telecommunication, public health facilities, water, sanitation, and housing, and support in the industrial and tourism area.
Explicitly, the government set aside Rp 30.5 trillion for the transforming government processes to digital and increase the coverage of 4G broadband mobile network at the village.
Separately, Communication and Information Technology Minister Johnny G. Plate, said the ministry target for telecommunications operators to provide the 4G network to all villages, including the remotes area, in Indonesia by 2022.
"Therefore, it needs an unconventional financing scheme that combines state budget and other financing sources," Johnny said.
Healthcare budget
Under Indonesian healthcare law required the government to spend at least five percent of the budget for healthcare. The government has barely met that requirement in the past since the law was passed in 2009, perpetuating weaknesses in the healthcare system that got fully exposed during the Covid-19 pandemic.
Next year, Jokowi was adamant about throwing more funds on the sector. The government would increase its health budget to Rp 170 trillion, or 6.2 percent of the total budget, "the handling of infectious diseases [...] and strengthening the prevention, detection, and response to diseases," Jokowi said.
The government would also set aside the budget for the stunting eradication program and improving effectiveness and ensuring the sustainability of the national health insurance scheme (BPJS Kesehatan).
Food estate
Jokowi earmarked Rp 104 trillion for various programs to enhance Indonesia's food security.
"[The budget] would be directed to encourage the production of food commodities by developing the infrastructure and technology; revitalization of the national food system by strengthening farmer and fisherman corporation, distribution food, as well as developing food estates to increase productivity," Jokowi said.
Last month, the president tasked his former presidential rival Prabowo Subianto, who is now serving as the defense minister, to personally oversee the development of a giant food estate in Central Kalimantan.
Economic recovery program
Jokowi said the government would continue the so-called National Economic Recovery program (PEN) next year, providing cash transfer to the poor and unemployed as wells as financing support to businesses. This program comprises all the add-ons in the regular budget posts.
The government would set aside Rp 357 trillion for the program or just about half of the Rp 692.5 trillion that the government set to spend this year. Under the recovery program, the government set aside Rp 25 trillion for vaccines, healthcare research, and development, laboratory construction, and subsidies for BPJS Kesehatan.
There would be Rp 110 trillion for social safety net programs, down from Rp 203.9 trillion this year, as the government would no longer provide the unemployment benefits.
Jokowi said the government target unemployment rate of 7.7-9.1 percent and extreme poverty rate – or percentage of the population living below $1.9 a day – at 9.2-9.7 percent next year. Today, the unemployment rate stood at 4.9 percent, while the poverty rate 9.2 percent.