Vedro Imanuel Girsang, Jakarta – Economist Awalil Rizky from Bright Institute assessed that the Finance Ministry is refusing to acknowledge the weakening dynamics of the national economy, as evidenced by declining tax revenue.

"The Finance Ministry is not acknowledging the economic slowdown of the past two months, which has led to a decrease in tax revenue," Awalil said in a written statement quoted on Saturday, March 15, 2025.

Awalil explained that tax revenue through February 2025 reached Rp240.4 trillion, a drop of approximately 24.99 percent from last year's Rp320.51 trillion. "Even the better performance of the first two months of last year failed to meet the tax revenue target," he continued.

According to Awalil, tax revenue performance is also affected by the cancellation of the general value-added tax (VAT) increase. The government opted to increase VAT only on luxury goods, while the broader VAT increase was initially included in the revenue target. "There is also no acknowledgment that the problematic implementation of Coretax contributes to the tax revenue performance," Awalil added.

Awalil argued that the ministry's explanations cannot mask the fact of declining tax revenue. Therefore, the government must prepare risk mitigation for potentially poor tax revenue realization, far from the target. "Overall, the state revenue conditions of the first two months of 2025 should serve as a warning," he emphasized.

The Finance Ministry previously reported specific tax revenue through February 2025 at only Rp187.8 trillion. This represents a decrease of approximately 30.1 percent compared to the same period last year, when tax revenue reached Rp269.02 trillion.

Finance Minister Sri Mulyani Indrawati urged the public not to "dramatize" the tax revenue decrease in the first two months of 2025, as this would create fear and negatively impact the economy.

"I ask you all not to dramatize to create fear. It may work, but it's not good for all of us. It's also not good for the economy," Sri stated in a press conference at the Finance Ministry building, Central Jakarta, on Thursday, March 13, 2025.

– Ervana Trikarinaputri contributed to the writing of this article.

Source: https://en.tempo.co/read/1986887/economist-indonesian-govt-is-in-denial-over-economic-downtur