JAKARTA - The Ministry of Finance’s Fiscal Policy Agency (BKF) has estimated that the 2021 State Budget deficit will reach the range of 4.5%-4.7% of the gross domestic product (GDP).
According to BKF Head Febrio Nathan Kacaribu, the estimate is higher than the government’s proposed estimate of 3.21%-4.17% of the GDP in the 2021 State Budget Design. This is due to the projected high amount of financing required for economic recovery next year after the coronavirus (COVID-19) pandemic.
“While we are drafting the financial notes, the deficit is projected to be in the range of 4.5% to 4.7% of the GDP. We do not want the deficit to suddenly plunge from 6.38%,” Mr Kacaribu said in a virtual discussion on Friday (17/7) as quoted from CNN Indonesia.
However, Mr Kacaribu remains optimistic that the Budget deficit will drop to below 3% of the GDP as targeted by 2023. According to him, the state needs great fiscal capabilities to encourage economic recovery and gradually reduce costs to provide social safety nets.
“We can’t afford to be reckless, and we need to be careful because if we reach 6.3% next year it’s impossible to suddenly drop to below 3%. We should aim for some flexibility,” Mr Kacaribu remarked. (MS)