State Budget Must Become Solution to COVID-19 Impact: Sri Mulyani

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani asserted that the state budget (APBN) should serve as a solution and support the economy in the face of the new type of coronavirus (Covid-19) gaining entry into Indonesia.

"The state budget instrument must be a source of solutions even when the state budget is under pressure, as the economy is under pressure," the minister remarked at the Ministry of Finance Office, Jakarta, on Monday.

Indrawati emphasized that the government, especially the finance ministry’s employees, as the treasurers of state finance, should closely observe the Covid-19 outbreak that has hit 100 countries.

"That is the dynamics of change that you must read and know and then utilize state finances to respond to that," the minister expounded.

Indrawati noted that through the ability to decipher the situation and dynamics, the outlook and response in creating solutions through the utilization of the state budget can be conducted.

"You are able to behave and respond to parts of the solution," the minister stated.

Indrawati stressed the impact of COVID-19 was apparent from the outbreak paralyzing the situation in China and Singapore.

Hence, the APBN’s function was that of a fiscal instrument that should be able to mitigate the impacts of the virus, so that it did not affect the nation’s entire economic system.

Indrawati also highlighted the need for collaboration and synergy between the relevant governments for management of the state budget, so that it can support the Indonesian economy that was disrupted by Covid-19.

"Indeed, the solution is not all state finances, but state finances do have an important role. We are now a team, so synergy and collaboration are increasingly being questioned," she pointed out.

The coronavirus outbreak has a more complex impact on the global economy than the 2008 global economic pressure, fueled by US investment bank Lehman Brothers’ bankruptcy, Indrawati had earlier stated.

The Covid-19 outbreak has put direct pressure on individuals and not through the financial sector as in 2008, the minister noted.

The direct pressure on individuals has disrupted economic and other activities of the community, including the closure of schools and factories, thereby resulting in a delay in the realization of public activities, including production, she stated.

"It (the coronavirus outbreak) is more complicated since it is related to humans. They must first shield themselves against the so-called threat or risk to their safety and health that may endanger their lives," the minister explained.

The 2008 global economic pressure only had a short-term impact due to transmission to the financial industry. The 2008 crisis, resulting from the bankruptcy of Lehman Brothers, had a subsequent impact such as layoff and corporation closure, Indrawati stated.

"However, it (coronavirus) has a direct impact on patients, so it is of a deeper nature than (the 2008 global economic pressure) since the patients can suddenly become semi-paralyzed," she cautioned.

ANTARA