Sri Mulyani: Delta Variant Disturbs Economic Recovery Efforts

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati said the Delta variant of the new coronavirus has disrupted the momentum of Indonesia's economic recovery. The 2021 State Budget was expected to motorize economic recovery efforts, but adjustments had to be made due to the high number of Covid-19 cases.

"The state budget had to be refocused. Covid relief spending was raised. But we are also preventing a wider deficit, thus budget reallocation becomes a necessity," the minister said at the ISEI seminar on Tuesday, August 31.

When the Delta variant spread across Indonesia, the government decided to impose tougher restrictions on community activities, known locally as the PPKM—raising the levels to 'emergency' and 'Level 4'.  The PPKM lasted throughout July and August; with risks of affecting economic growth in quarters three and four.  

This is unfortunate as Indonesia had managed to exit the recession zone in quarter two, posting a growth of 7.07 percent and a GDP that exceeded pre-pandemic levels. 

Prior to Covid, Indonesia's real GDP stood at Rp2,735 trillion. In Q2/2020, it plunged to Rp2,590 trillion. A year later, at Q2/2021, the GDP rebounded to Rp2,773 trillion.

Despite future challenges from new variants of the coronavirus, Sri Mulyani said the 2021 State Budget was designed to be very responsive, following government policies that are adaptive and flexible, but with a clear direction. 

The minister said that there are indications of economic improvements in August, as seen from people's increasing mobility. She wished that Indonesia would show signs of recovery again in August and September, so that "economic performances in quarter three can recover gradually."  

Read: Sri Mulyani Predicts Economic Growth to Reach 4.5 Percent

Francisca Christy Rosana | Maudey K. Setyakusuma