Press Statement: Kebijakan Ekonomi Makro dan Pokok Pokok Kebijakan Fiskal Tahun 2024

Summary

The transcript covers a briefing by Indonesian officials regarding the 2024 fiscal policy and macroeconomic framework. The presentation highlights the nation's economic recovery, challenges posed by global disruptions, and the strategic direction for the national budget (APBN) in 2024. Key points include efforts to stabilize the economy amid global inflation and rising interest rates, maintaining fiscal health, and tackling structural challenges like infrastructure and regulatory efficiency. Discussions also touch on tax policy, including a possible increase in VAT and the introduction of sugar taxes, as well as fiscal year 2024's projected exchange rates and the focus on stabilizing the Rupiah.

Takeaways

• 😀 The 2024 state budget (APBN) is a critical policy document for Indonesia, focusing on macroeconomic stability and long-term development goals.
• 😀 Indonesia's economic situation is relatively strong despite global disruptions like the pandemic, geopolitical challenges, and supply chain issues.
• 😀 The 2024 fiscal policy will be based on a solid foundation built over the past 10 years, including infrastructure improvements and regulatory reforms.
• 😀 There will be a cautious approach to managing global inflation and high interest rates, which could impact liquidity and economic growth.
• 😀 The government is aiming for a tax ratio of around 11.05% for 2024, reflecting growth in tax revenue and economic performance.
• 😀 The VAT increase from 11% to 12%, as stipulated by the HPP law, is expected to be implemented by 2025, but the government will follow the law for 2024.
• 😀 There are discussions about introducing excise taxes on sugary drinks to curb unhealthy consumption, with implementation in the 2024 budget.
• 😀 Indonesia's trade balance remains positive, with exports performing well and a surplus in the balance of payments.
• 😀 The government is focused on strengthening human resources and improving bureaucratic efficiency as part of its broader economic strategy.
• 😀 The exchange rate for the Indonesian Rupiah is expected to remain relatively stable, supported by a strong external trade performance and capital inflows.

Q & A

What is the main focus of the discussion regarding Indonesia's fiscal policies in 2024?

The main focus is on Indonesia's macroeconomic framework and fiscal policies for 2024, which will form the foundation for the preparation of the 2024 state budget (RAPBN). The policies are designed to build upon achievements over the past decade and address both external challenges, such as global shocks, and internal structural issues, like infrastructure and regulatory efficiency.

How has Indonesia's economy been performing recently according to the transcript?

Indonesia's economy has been performing relatively well, with positive growth in the first quarter at 5.02%. Inflation has decreased, and the country continues to maintain a surplus in its trade balance. These positive trends support the formulation of the 2024 APBN.

What are the key external challenges Indonesia needs to manage?

Indonesia needs to manage several external challenges, including global shocks from the pandemic, geopolitical tensions, supply chain disruptions, and the impact of the digital economy. These factors have created challenges for the country's economic performance.

What internal issues are identified as areas for improvement in Indonesia's economy?

Internal challenges include improving infrastructure, regulatory and bureaucratic efficiency, and the quality of human resources. These areas are critical for building a stronger economic foundation.

Why is 2024 a significant year for Indonesia's government leadership?

2024 is the final year of President Joko Widodo's leadership, making it crucial for the government to achieve its economic and development targets. This year will set the foundation for the next administration, especially in terms of fiscal policies and national development.

What concerns does Indonesia have regarding global inflation and high interest rates?

Indonesia is cautious about the global trend of high inflation and high interest rates, as they could tighten liquidity and increase the cost of borrowing. These factors are seen as potential risks to the country's economic stability.

What is Indonesia's stance on the implementation of the VAT rate increase from 11% to 12%?

The increase in VAT from 11% to 12%, as mandated by the HPP Law, will proceed in line with the law's timeline, which specifies that the change should take effect by 2025. However, the government intends to maintain the current VAT rate in the 2024 APBN.

What is the government's position on the potential implementation of a sugar tax or sweetened beverage tax in 2024?

The government is discussing the implementation of a sugar tax as part of efforts to regulate harmful consumption, such as sugary drinks, along with taxes on plastic and tobacco. The final decision on its inclusion will depend on discussions with the DPR as part of the 2024 budget framework.

How is Indonesia managing its currency exchange rate and external economic influences?

Indonesia is closely monitoring external factors that affect the Rupiah exchange rate, including global economic conditions and trade balances. The government is working with Bank Indonesia to maintain currency stability, leveraging positive trade balances and capital inflows to support the Rupiah's strength.

What are the key budget assumptions for Indonesia's 2024 APBN regarding revenue and tax ratios?

The revenue assumptions for the 2024 APBN are built on strong economic performance, with the tax ratio expected to be around 11.05%. This reflects a healthy tax collection environment, supported by improved tax compliance and economic recovery.