Indonesia Parliament Approves 2021 Budget to Seek 5% Growth

  • Indonesia’s parliament approved a state budget for 2021 that seeks to bring the economy back to 5% growth.
  • Lawmakers agreed to formalize the budget into law at a plenary meeting on 29 Sep 20. State spending is set at a record high IDR2.75qd for 2021, with the economic growth assumption set at 5% and the fiscal deficit seen at 5.7% of gross domestic product.
  • The 2021 projection will be supported by a recovery in domestic consumption as economic activity returns to “a new normal state,” as well as a rebound in the global economy, said Finance Minister Sri Mulyani Indrawati.
  • The central bank will remain a standby buyer for as much as 25% of government debt through 2022, Governor Perry Warjiyo told parliament on 27 Sep 20.
  • Bank Indonesia may also continue its “burden-sharing” program if the IDR397.56tr it allocated for 2020 isn’t fully realized, he said, without specifying if he’s referring to direct purchases of government bonds by the central bank.
  • Bank Indonesia and the Finance Ministry have repeatedly said the program to buy bonds directly from the government is a one-off move amid the pandemic. So far, the central bank has bought IDR183.48tr of bonds directly from the government.

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