KEBIJAKAN EKONOMI INDONESIA

Summary

The presentation discusses key aspects of Indonesia's economic policies, focusing on fiscal policy, monetary policy, and foreign debt. It covers the roles of the government and the Ministry of Finance in fiscal decision-making, including strategies like surplus, deficit, and balanced budgets. It also explores the effects of fiscal policies on national economic growth, employment, and price stability. The discussion on monetary policy emphasizes mechanisms like money supply control and interest rates. Additionally, the challenges of foreign debt and its impact on the nation's economy, along with potential solutions like restructuring and diplomacy, are highlighted.

Takeaways

• 😀 Fiscal policy is a macroeconomic policy, primarily managed by the government through the Ministry of Finance, and is governed by Law No. 17/2003 on State Finances.
• 😀 The main goal of fiscal policy is to control a country's economic conditions by managing the balance between government expenditure and revenue.
• 😀 Fiscal policy includes measures like government budgets, which are used to influence the economy. In Indonesia, this is known as the APBN (State Budget).
• 😀 The main objectives of fiscal policy are: boosting GDP, creating jobs, and maintaining price stability to improve the overall economy.
• 😀 Surplus fiscal policy refers to a situation where the government’s revenue exceeds its expenditure, helping to combat inflation by reducing aggregate demand.
• 😀 A deficit fiscal policy occurs when government expenditure exceeds revenue, often requiring borrowing to cover the gap, which can be used to stimulate economic growth.
• 😀 A balanced budget ensures that government revenue matches expenditure, but it can lead to deflation if reduced spending slows down the economy.
• 😀 Monetary policy, controlled by Indonesia’s central bank (Bank Indonesia), is essential in managing inflation by regulating the money supply and interest rates.
• 😀 International debt is a loan received by a government from foreign entities to finance projects, cover budget deficits, or manage transactions that affect a country’s foreign exchange reserves.
• 😀 Indonesia’s foreign debt has historically been influenced by factors such as trade deficits, fiscal deficits, and the need for capital investment, which can lead to financial crises if not managed carefully.
• 😀 The government can mitigate foreign debt burdens through debt restructuring, economic diplomacy, and stabilizing domestic macroeconomic conditions to avoid excessive reliance on foreign loans.

Q & A

What is fiscal policy and who is responsible for it in Indonesia?

Fiscal policy is a key economic policy used to manage the economy through government spending and revenue collection. In Indonesia, fiscal policy is primarily managed by the Ministry of Finance, with authority granted to the president under the 2003 Law on State Finance.

What are the main objectives of fiscal policy in Indonesia?

The main objectives of fiscal policy in Indonesia include increasing GDP and per capita GDP, boosting employment, and maintaining price stability. It also aims to control a country's income and expenditure to achieve better economic outcomes.

How does fiscal policy impact job creation in Indonesia?

Fiscal policy impacts job creation by stimulating the economy, which leads to the growth of industries and businesses. As the economy expands, the demand for labor in labor-intensive sectors increases, thereby creating more jobs.

What is the difference between a surplus, deficit, and balanced budget in fiscal policy?

A surplus budget occurs when the government's revenue exceeds its expenditures, allowing it to save money. A deficit budget happens when expenditures exceed revenues, often leading to borrowing. A balanced budget occurs when revenue equals expenditures, meaning there is neither a surplus nor a deficit.

What role does inflation play in fiscal policy?

Inflation affects fiscal policy by influencing government decisions on spending and taxation. High inflation may lead the government to reduce spending or increase taxes, while low inflation may prompt increased public investment to stimulate growth.

What are some of the tools used in fiscal policy to manage inflation?

Tools used to manage inflation include adjusting government spending, increasing taxes to reduce demand, and controlling public borrowing. Fiscal policies like budget surpluses help reduce inflationary pressures by limiting the money circulating in the economy.

What is monetary policy and how does it relate to fiscal policy in Indonesia?

Monetary policy is the control of the money supply and interest rates by the central bank to regulate economic activity. In Indonesia, monetary policy is managed by Bank Indonesia. It works alongside fiscal policy to control inflation, stabilize the economy, and foster growth.

What are the two major theories of money demand discussed in the script?

The two major theories of money demand discussed are the Quantity Theory of Money, which states that money is solely a medium of exchange in a balanced economy, and the Keynesian Theory, which suggests that money demand is influenced by factors such as wealth, interest rates, and expectations about the future.

How does foreign debt affect Indonesia's economy?

Foreign debt helps cover budget deficits and finance investments but can also create risks if the debt becomes too high. Excessive foreign borrowing can lead to an increased debt burden, affecting the country's fiscal health and its ability to finance domestic projects without worsening the debt situation.

What measures has Indonesia taken to reduce dependence on foreign debt?

To reduce dependence on foreign debt, Indonesia has focused on increasing domestic debt through the issuance of government bonds (Surat Utang Negara). The government also aims to stabilize the macroeconomy and engage in economic diplomacy to renegotiate or reduce foreign debt obligations.