Summary of "[FULL] Menkeu Purbaya Kasih Paham 100 Ekonom Indonesia Arah Kebijakan Ekonomi Nasional"

Discussion with Indonesia’s Minister of Finance: Purbaya Yudisadewa

The video features a comprehensive discussion with Indonesia’s Minister of Finance, Purbaya Yudisadewa, addressing the current state and direction of national economic policy, fiscal management, and economic growth strategies amid ongoing challenges.

Key Points and Analyses

1. Budget Management and APBN Needs

The minister acknowledges the complexity of managing the state budget (APBN) given the large financial demands from various ministries, especially in sectors like fisheries and health. He emphasizes the importance of efficient and timely spending to stimulate economic growth.

2. Tax Policy and Public Perception

Efforts are underway to increase the tax-to-GDP ratio while maintaining incentives for businesses. Adjustments such as raising the non-taxable income threshold (PTKP) aim to ease the tax burden on individuals, helping maintain public confidence and consumption.

3. Countercyclical Fiscal Policy

The government’s approach focuses on countering economic downturns by implementing fiscal measures rather than tightening taxes, which could worsen the decline. The minister stresses optimizing existing funds rather than excessively expanding fiscal spending at this stage.

4. Liquidity Injection and Interest Rates

Approximately IDR 200 trillion was transferred from the central bank to commercial banks to increase liquidity. This move has led to lower interest rates and encouraged credit growth. It is described as a simple but effective measure to revive economic activity.

5. Economic Growth Outlook

Purbaya expresses optimism about economic recovery, noting visible improvements in credit growth and public optimism. The target is economic growth above 5.5%, with potential to reach 6-8% in the coming years through private sector revival and government support.

6. Regional Transfers and Autonomy

The minister clarifies that regional fund transfers have not been cut but adjusted for efficiency. He urges regional governments to improve financial management and spending effectiveness before requesting increased transfers. Challenges with infrastructure maintenance at the regional level are highlighted, advocating for smarter decentralized spending.

7. Debt Management and Fiscal Prudence

Despite rising debt levels, Indonesia’s debt-to-GDP ratio remains within safe international standards (below 40%), with a government deficit under 3%. Measured debt issuance is deemed necessary to support growth, and abruptly stopping debt accumulation would harm the economy.

8. Tax Reform and Risk Disclosure

Concerns about tax absorption reducing disposable income are addressed by explaining that tax revenues are recycled into fiscal spending, stimulating the economy. The minister acknowledges the importance of risk disclosure but notes that public communication focuses on optimism and prudent fiscal discipline.

9. Fiscal and Monetary Policy Coordination

The “burden sharing” mechanism between the Ministry of Finance and Bank Indonesia is discussed, emphasizing the need to maintain separation to avoid fiscal monetization except during crises. Macroprudential policies, such as reserve requirement reductions, are used to boost liquidity while controlling inflation.

10. Challenges and Future Plans

Ongoing efforts include improving tax administration systems, tackling tax evasion, and streamlining investment processes. Task forces have been formed to address business obstacles and improve the investment climate. The minister remains cautious about VAT adjustments due to revenue implications but is open to future reforms based on improved tax collection capacity.

11. Public Trust and Economic Sentiment

Building public trust and economic optimism is stressed as crucial, with positive expectations seen as drivers of real economic expansion. The minister uses historical data and economic theory to justify his policy stance and emphasizes the need for continued prudent management.

Presenters and Contributors

Purbaya Yudisadewa – Minister of Finance of the Republic of Indonesia
Prof. Didin Damanhuri – Founder of INDEF, senior economist
Rangga Cipta – Chief Economist, Mandiri Sekuritas (mentioned, absent)
Awalil Rizki – Economist, Bright Institute
Ciplis Gema Koria – Academic, University of Jember
Moderator(s) and other unnamed participants from ministries and institutions

This session provides an in-depth look at Indonesia’s fiscal strategies, emphasizing balanced growth, prudent debt management, and improving public and business confidence through coordinated economic policies.