Foolhardy State Budget Automatic Adjustment for Political Campaign
Monday, February 12, 2024
The government’s decision to block the state budget’s allocation for social assistance is dangerous. Campaign interests may be the reason.
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THE government’s step to block the 2024 budget for ministries and other institutions shows how reckless President Joko Widodo is in managing the country’s finances. Besides damaging the credibility of budgets, this move can also be seen as an attempt to flout laws and regulations.
The policy to block the state budget, or automatic adjustment, is outlined under the Finance Minister Circular No. S-1082/MK.02/2023, signed on December 29, 2023. In the letter, Finance Minister Sri Mulyani Indrawati asked all ministries and state institutions to put aside 5 percent of their expenditure budget as allocated in the 2024 State Budget, in order to gather reserve funds at Rp50.14 trillion. The argument was that should there be a turmoil due to global geopolitics, the State Budget would be able to buffer the shock of such a tumult, such as the rise in food prices.
The buffer program would take the form of additional social assistance and subsidized fertilizer. Fact is, even before a crisis has taken place, buffer programs will soon be rolled out close to the 2024 general elections. The politicization of social assistance has become increasingly evident, considering Jokowi’s son, Gibran Rakabuming Raka, is running for vice president alongside Prabowo Subianto.
Social assistance is already budgeted at Rp496 trillion in the State Budget, an increase of Rp20 trillion in the 2023 budget. With the additional social assistance, Sri Mulyani must find Rp11.25 trillion to cover these programs.
Furthermore, additional fertilizer subsidy, with a cost of Rp14 trillion, was performed when the management was still in chaos. Last year, from the realized fertilizer subsidy budget of Rp42.1 trillion, the government was only able to distribute 6.1 million tons of cheap fertilizer against the need of 10.7 million tons. Almost 40 percent of the realized budget was used to cover the government’s debt to Pupuk Indonesia.
The automatic adjustment policy feels even more absurd because Sri Mulyani, in her circular, stated that several posts would be exempted from the block. Among others, the spending on the development of the Nusantara Capital City, which is clearly not an urgent project and is a burden to state finances. Because of this automatic adjustment, many more important programs are under threat of neglect.
When Jokowi stated that the Covid-19 pandemic ended in June 2023, the government should have immediately reversed budget management regulations to how they were prior to the pandemic. Revisions to the State Budget have to be transparent and systematic by involving the House of Representatives through plenary hearings.
By deliberately maintaining the state budget’s management scenario as it was during the pandemic, when the automatic adjustment scheme is in place, Jokowi needs to be suspected of circumventing the law. Jokowi and his cronies will be able to plunder the state budget to fund programs that do not serve the people, such as subsidizing electric cars.
Once again, Jokowi has shown that he has earned the monicker “man of contradictions”: four months before the automatic adjustment circular was issued, Jokowi himself cautioned Sri Mulyani to safeguard the state budget.
Meanwhile, Sri Mulyani, as a state treasurer who has been named one of the world’s best finance ministers, should have had the courage to refuse Jokowi’s many wishes. Especially as she has frequently reminded her subordinates to maintain their professionalism and integrity.
By continuing to comply with Jokowi’s unreasonable wishes, Sri Mulyani is not only risking her credibility but also the country’s fiscal stability.
