The Indonesian parliament today approved President Joko Widodo's budget of $ 185 billion dollars for 2021, which his finance minister described as supporting the largest economy in Southeast Asia and also the start of fiscal consolidation.
In addition, the estimate is alleged to have a smaller fiscal deficit than this year. Total expenditure for 2021 was agreed at 2,750 trillion rupiah, 0.4% greater than the 2020 estimate, but the estimated deficit for 2021 is smaller at 5.7% of gross domestic product (GDP), compared to 6.34% this year.
In addition, the outlook for this year's budget deficit is the largest in decades due to increased spending to deal with the transmission of coronavirus.
According to Indonesian Finance Minister Sri Mulyani Indrawati, Indonesia's economy has been declining for the first time since the 1998 Asian financial crisis due to the outbreak of the Covid-19 pandemic from -1.7% to -0.6%. As such, the 2021 budget is expected to boost economic growth by 5%.
He added that fiscal consolidation will begin next year to meet the target of lowering the budget deficit to below 3% of GDP by 2023 and the government will strive to maintain growth momentum.
Meanwhile, the budget has set a target for the country's revenue of 1,743.6 trillion rupiah, higher than this year, partly driven by higher oil prices.
While health expenditure is allocated 169.7 trillion rupiah next year, 20% below 2020, driven by expenditure for Covid-19 this year, such as the construction of new hospitals.
In addition, a total of 18 trillion rupiahs has been allocated to get enough Covid-19 vaccine to accommodate 160 million people or about 60% of the country's population. Vaccine development is estimated at 3.7 trillion rupiahs and the study requires an expenditure of 1.2 trillion rupiah.
To boost growth, the government provided 413.8 trillion rupiah for infrastructure, recording an annual increase of almost 50%, to cover projects abandoned during the outbreak of the Covid-19 outbreak.
