JAKARTA: Indonesia’s President Joko Widodo on Friday (Aug 14) proposed a 2,747.5 trillion rupiah (US$185 billion) budget for 2021, with measures designed to focus on accelerating economic recovery amid the COVID-19 pandemic.
He also predicted that the country will see an economic growth of between 4.5 and 5.5 per cent next year.
“This rate of economic growth is expected to be supported by an increase in domestic consumption and investment as the main driving motors,” he said in the parliament.
The budget proposal, which is only 0.3 per cent higher than this year's revised budget, assumed a budget deficit of 5.5 per cent of gross domestic product.
The 2020 budget originally stood at 2,233.2 trillion rupiah, but was adjusted several times to tackle the challenges presented by the coronavirus pandemic.
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Jokowi, as the president is popularly known, forecasted inflation to remain at 3 per cent next year, with the country’s currency rupiah moving in the range of 14,600 against the greenback.
As of Friday, rupiah stands at 14,800 against USD.
The budget proposal also estimated unemployment rate to be between 7.7 and 9.1 per cent, and poverty rate to be between 9.2 and 9.7 per cent.
The president cautioned that global and domestic uncertainties would linger.
"At this time we also have to focus on preparing ourselves to face the year 2021.
“Global and domestic uncertainty will still happen. The economic recovery programmes will continue simultaneously with reforms in various fields," he said.
INDONESIA NEEDS MAJOR REFORMS TO OVERCOME ECONOMIC CRISIS
Earlier in the day, Jokowi said Indonesia needs fundamental and major reforms in the economy, law, health and education sectors as COVID-19 has taken a toll on the country’s development.
Speaking at the annual State of the Nation Address ahead of the country's 75th Independence Day next Monday, he said that every country in the world has been affected by the pandemic but Indonesia’s economy is still doing better than a lot of developed countries.
“In the first quarter of 2020, our economic growth was 2.97 per cent but in the second quarter, we saw a contraction of 5.32 per cent.
“The economy in developed countries even contracted by double digit percentage points, up to 17 per cent. The setbacks faced by many of these big countries can be an opportunity and momentum for us to catch up,” he said in the parliament.
The president likened the current economic crisis to a computer crash which every country must restart, reboot and reset.
He reflected how the pandemic has forced Indonesia to take extraordinary measures and "smart shortcuts".
Last month, Jokowi announced the establishment of a food estate in Central Kalimantan province by turning land into paddy fields. Another food estate will be developed in North Sumatra, he announced in his Friday speech.
Apart from food security, he also said that Indonesia is heading towards energy independence after implementing a mandatory use of biodiesel with 30 per cent of palm oil, known as B30.
The State of the Nation Address was held with less than half of the Members of Parliament present due to the pandemic. The majority of lawmakers followed the meeting online.
Indonesia has budgeted 695.2 trillion rupiah (US$47 billion) worth of stimulus for 2020 to protect the country's economy from the impact of COVID-19, but despite that, it recorded a contraction for the first time in more than 20 years.
The country is still battling COVID-19, with more than 132,000 infections and about 6,000 deaths as of Friday.