Deputy Speaker of the House, Rachmat Gobel, who is also a Member of Commission XI of the House, advised the government to submit a revised State Budget for the 2020 fiscal year to ensure effective and more flexible utilization of the Budget for Covid-19 relief and countermeasures of its adverse impacts on the economy.

“We may not reach some of the 2020 Budget targets and fiscal outlook, particularly now that the government is requiring a large budget to mitigate the Covid-19 outbreak. This is why the revised 2020 State Budget is necessary, and it needs to be done as soon as possible. The House will certainly give its full support to the government,” said Mr. Gobel in a press release to Parlementaria, Monday (23/3).

The 2020 State Budget, passed in September 2019, targeted, among others, a state revenue of Rp. 2,233.2 trillion and a state expenditure of Rp. 2,528.8 trillion. Thus, the projected deficit was estimated at Rp. 307.2 trillion. The Budget was formulated based on the fiscal outlook of 5.3% of GDP, 3.1% of inflation, and the exchange rate of Rp. 14,000 per US dollar.

“Based on the current situation and the projected outlook, I think it would be hard to achieve the 2020 State Budget targets and fiscal outlook. And that is a revised State Budget is necessary,” the National Democrat politician added. The Deputy Speaker said the revision would certainly not only be about state revenues and expenditures; the more pressing matter was the revised budget allocation in different sectors and ministries.

“The budget allocation priorities today and in the future will be dramatically different than the previous ones. The 2020 State Budget priorities will be targeted primarily towards Covid-19 relief and measures to counter its adverse impacts on the economy, especially at the grassroot level, to prevent less fortunate people from falling even further into poverty,” Gobel said.

Gobel highlighted how Covid-19 relief efforts would certainly hit economic growth and eventually take its toll on employment and overall individual income. Minister of Finance, Sri Mulyani, mentioned that under the worst-case scenario if the Covid-19 pandemic persisted in a long period of 3 to 6 months, international trade value would fall below 30%, while Indonesia’s economic growth would plummet to 2.5%, could be even 0%.

According to the Gorontalo-based legislator, Indonesia must be prepared for the worst-case scenario to avoid undesired impacts upon the lives of the people. “Now is the time for us to respond swiftly and collaboratively amidst the challenging situation. There is no more time to argue, and that is why the government has issued a directive and taken stern measures,” said Gobel.

In the meantime, the financial market reported that Covid-19 outbreak had created panic among market players, putting more pressure on the exchange rate and the stock exchange composite index (JCI). When the spot market was closed on Monday (23/3), the exchange rate had reached Rp. 16,550 per US dollar, depreciated by 4.09% from Rp. 15,913 per US dollar when the market was closed last week (Friday, 20/3).

Indonesia Stock Exchange also reported that following a strong opening, the JCI soon fell before it was closed at 3,989, slipping 4.9% from last week when it was closed at 4,194. This means that in the last week alone, the JCI has nosedived 14.2%, hitting its 7-year low since 2013.

The global economic slowdown due to Covid-19 outbreak has also resulted in lower actual tax revenue. According to the Ministry of Finance, until the end of February, actual tax revenue has only reached Rp. 152.9 trillion, which is 5% less than the same period in 2019. The decline was mainly observed in oil and gas income tax, which is only Rp. 6.6 trillion, or 36.8% lower than the previous year.