The House of Representatives’ budget committee holds a session with the Finance Ministry and Bank Indonesia on the country's fiscal performance, projection and economy on July 8, 2024. - The Jakarta Post/ANN
JAKARTA: The government has allocated Rp 109.62 trillion (US$7.1 billion) worth of buffer funds, which were initially earmarked as reserves for education, transfers to regions and general purposes, to finance president-elect Prabowo Subianto ’s costly Quick Win programmes.
“So [the Quick Win programmes] can be immediately executed, we modeled [next year’s reallocation plan] after the current budget situation,” National Development Planning Agency (Bappenas) secretary Teni Widuriyanti said on Wednesday (Sept 4).
“We’ve started setting aside [some funds] so the programmes can move ahead; so the landing will be soft,” Teni told reporters on the sidelines of an event held by the Millennium Challenge Corporation, a United States government foreign aid agency.
In a meeting with the House of Representatives’ Budget Committee, Finance Minister Sri Mulyani Indrawati revealed on Wednesday that Prabowo’s Quick Win programmes, which the president-elect himself had “instructed”, would need Rp 113 trillion to run in the first year, as reported by Kompas daily.
In addition, she said Rp 4.87 trillion was needed to add to the spending of some state institutions, bringing the planned extra expenditure for ministries and government agencies to Rp 117.87 trillion.
The Quick Win agenda is divided into four clusters, the costliest of which is the free meals program run by the National Nutrition Agency and set to require Rp 71 trillion in the first year.
Free medical check-ups and improved hospitals in the regions, which together form the second cluster, come with price tags of Rp 3.2 trillion and Rp 1.8 trillion, respectively.
Education is the third cluster and encompasses programmes run by multiple ministries to renovate schools for Rp 20 trillion and construct “distinguished schools” in four locations for another Rp 2 trillion.
The establishment of national and regional food estates costing Rp 15 trillion is a dedicated cluster to be run by the Agriculture Ministry in tandem with the Public Works and Housing Ministry.
To fund the Quick Win clusters and the extra spending for government institutions, Sri Mulyani said, the state would have to raise more nontax revenue, which then would contribute Rp 8.26 trillion to the total, while the other Rp 109.62 trillion was to come from the aforementioned reserves.
The education reserve will be the one to suffer the most as the Quick Win would take Rp 66.85 trillion from that pool.
Another Rp 28.39 trillion would come from the state spending reserve, while the regional transfer reserve would be cut to obtain another Rp 14.38 trillion, revealed Sri Mulyani.
These reserves served as a “buffer” and “shock absorber”, said Sri Mulyani, which raises questions about their allocation for the Quick Win agenda.
Bank Permata chief economist Josua Pardede told The Jakarta Post on Thursday that buffers were there to mitigate global risks, so that Indonesia’s fiscal policy could stay the course and not get tossed about by external factors.
He said using some of the reserves now would make “our economy more susceptible” to global conditions and therefore less resilient.
“This is not small spending; it must be compensated for by reducing spending on other fronts,” Josua said, emphasising that not doing so meant the fiscal direction was no longer “conservative,” but “it must be”.
BCA chief economist David Sumual told the Post on Thursday that the Quick Win agenda could not be implemented all at once but had to be undertaken in stages, given the fiscal limitations.
He called for a “more careful” and “prudent” fiscal management, given that the country’s revenue was still subject to uncertainty.
However, he noted that some countries succeeded in retaining positive sentiment despite expansive fiscal plans, “so long as the government explains and elaborates the plans in detail” to investors.
He said reallocating reserves was legitimate “budget politics” but warned against risks such as natural disasters, adding that, if a government did not hold enough reserves for such contingencies, the country might drive itself into a budget crisis when disaster strikes. - The Jakarta Post/ANN
