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Increase in 2021 Pen Budget Allocation in Accelerating Economic Recovery 19 Research Center Center ECONOMIC AND PUBLIC POLICY DIVISION Expertise Agency Agency of of DPR DPR RI RI Gd. NusantaraNusantara I I Lt. Lt. 2 2 Jl. Jend.Jend. Gatot Gatot Subroto Subroto Jakarta Pusat Pusat - -10270 10270 c 5715409 5715409 d d 5715245 5715245 m [email protected]@gmail.com A BRIEF STUDY OF ACTUAL AND STRATEGIC ISSUES Vol.XIII, No. 5/I/Puslit/March/2021 INCREASE IN 2021 PEN BUDGET ALLOCATION IN ACCELERATING ECONOMIC RECOVERY 19 Edmira Rivani Abstract Social distancing due to the Covid-19 pandemic has had an impact on the cessation of economic activity and decline in economic performance. The government prepares National Economic Recovery (PEN) Program to recover the economy of Indonesia. This paper will try to examine the increase in budget allocation, challenge, and strategy of 2021 PEN program in accelerating economic recovery. The government increases the budget ceiling of PEN program twice as much compared to that established in UU APBN 2021, exceeding Rp 699.4 trillion. The 2021 PEN budget focuses on five fields, those are health, social protection, priority program, business incentive, and supports of MSMEs and corporate financing. The economic recovery affected by Covid-19 pandemic will encounter a tough challenge. One of its causes is the performance of PEN stimulus distribution in 2020 which has not been effective, so that in 2021 the implementation and effectiveness of recovery program become an issue which must be countered by the government. Supports and supervision from the Indonesian House of Representatives, especially related commissions, are very much needed in accelerating the Indonesian economic recovery in this 2021. Introduction On the domestic side, the The Covid-19 pandemic that has Indonesian economic pressure was been going on for one year, creates one of the most moderate. With pressure and effects in al sectors, a relatively low deficit, Indonesia both globally and domestically. was still capable of being one of However, the year 2021 is predicted the countries with a durability of to experience improvement with the economic growth which was quite acceleration of vaccination carried good among G20 and ASEAN out almost in all countries, including (kemenkeu.go.id., February 26, Indonesia. In the middle of vaccine 2021). The continuity of Indonesian PUSLIT BKD positive sentiment, global GDP economic recovery phase is reflected outlook confronts uncertainty risks in by the fourth quarter of 2020 GDP the form of new wave and discovery growth rate in the amount of of new variants of the virus that -2.19% (year on year/Year on Year), causes Covid-19. increasing from two prior quarters that recorded contraction of -5.32% in ceiling only in two months throughout the second quarter and -3.49% in the the year 2021. Such recovery budget third quarter. The domestic economic increased almost twice as much recovery is expected to continue, the compared to that established in UU year 2021 was projected to grow 5.0%, APBN in Fiscal Year 2021. At first, the with a range of 4.5 – 5.3% (kemenkeu. recovery budget was in the amount of go.id., February 26, 2021). Rp 372.3 trillion, and now it becomes Starting the year 2021, the Rp 699.4 trillion. The 2021 PEN budget economy of Indonesia keeps moving focuses on five fields, those are health, forward, although several indicators social protection, priority program, move in varies. The government keeps business incentive, and supports of trying to control the pandemic by MSMEs and corporate financing. The balancing the policy of imposition of first field, health, has a budget allocation restrictions on community activities of Rp 176.3 trillion involving vaccination (PPKM) and economic activities so that program of Rp 58.18 trillion, diagnostic 20 the public health is maintained and the program (testing and tracing) of Rp 9.91 economy keeps moving. Therefore, trillion, therapeutic program of Rp 61.94 the government prepares National trillion, tax incentive for health of Rp Economic Recovery (PEN) program 18.61 trillion, and other handlings of Rp to recover the economy of Indonesia. 27.67 trillion (Media Indonesia, February The 2021 PEN budget allocation 24, 2021). soars approaching 21% of the budget The second field is social protection realization in 2020 since it is the most in the amount of Rp 157.41 trillion, important engine in today’s economic. involving among others the Hope Family The Minister of Finance explains that Program for 10 million beneficiaries the increase in PEN budget is intended in the amount of Rp 28.71 trillion and to maintain the economic recovery SEMBAKO Card of Rp 45.12 trillion. momentum in progress, being an Then, the third field is priority program effective thrust for the recovery, in the amount of Rp 125.06 trillion especially for the front loading in involving MA Padat Karya (ministry/ the first quarter of 2021. During the agency “labor-intensive” program) of pandemic, the public is very much Rp 27.33 trillion, food security of Rp depending on the state budget (APBN) 47.1 trillion, industrial area of Rp 11.33 so that the 2021 PEN budget can be trillion, regional loans of Rp 10 trillion, an engine of public economy. This Information and Communication paper will try to examine the increase Technology (ICT) of Rp 16.65 trillion, in PEN Program budget allocation, tourism of Rp 8.66 trillion, and other PEN Program challenges based on priorities of Rp 4.11 trillion. The fourth evaluation in 2020, and strategies so field of PEN focus is supports of MSMEs that PEN Program can encourage to and corporate financing in the amount of accelerate the Indonesian economic Rp 186.81 trillion. Meanwhile, the fifth recovery. field is business incentive in the amount of Rp 53.86 trillion (Republika, February Increase in PEN Program Budget 24, 2021). The increase in PEN budget Allocation Year 2021 is expected to encourage the economic The government for the five recovery acceleration and maintain times increased PEN Program budget public economy affected by Covid-19. PEN Program Challenge of 8.5 million, Indonesian residents can The economic recovery of 2021 is fall into the abyss of poverty due to projected to encounter a tough challenge. Covid-19 crisis. One of its causes is the performance of For the supports of MSMEs, the PEN stimulus distribution in 2020 which ineffectiveness is reflected by the support has not been effective. The government realization in the form of business poured out stimulus funds in the amount incentive which only absorbed 45.4% of of Rp 695.2 trillion for the 2020 PEN Rp 120.61 trillion total ceiling until the program. However, until the end of end of 2020. The impact, as stated in the 2020 it has not been fully realized. The World Bank report, was an uneven rate PEN budget realization until December of recovery in all business sectors in the 31, 2020 just reached 83.4% of the total third quarter of 2020. The sectors with a budget or in the amount of Rp 579.78 high intensity of inter-person contacts trillion (Media Indonesia, February 25, such as transportation, hospitality, 2021). trading, construction, and manufacture 21 The program stimulus distribution had very tough impacts and just partially with the highest percentage was social recovered. Meanwhile, the sectors protection and supports of MSMEs. decreased from the prior quarter were However, it has not been effective for agriculture, mining, information and such two programs. The ineffectiveness communication, financial service, and of social protection program can be real estate. reflected by the household consumption The PEN budget in 2020 was growth, the greatest contributor of Gross only 4.2% of total GDP. It was much Domestic Product (GDP) in the record smaller than India and Turkey which of Central Agency on Statistics. This budgeted the Covid-19 stimulus fund component only grew thinly from -5.52% in the amount of 10% and 12.8% of total anually (YoY) in the second quarter of GDP respectively. With the larger ratio 2020, to -4.04% (YoY) in the next quarter. of stimulus, India and Turkey were Besides, the government has recorded capable to recover their economy faster 67.54 million families which have than Indonesia (Table 1). The economy received social assistance benefits in the of India increased by 16.4% from the form of SEMBAKO and unconditional growth of -23.9% in the second quarter cash transfer per December 23, 2020 of 2020 to -7.5% in the next quarter. Then, (katadata.co.id., March 1, 2021). the economy of Turkey increased by Based on the manpower of Central 26.4% from the growth of -10.8% in the Agency on Statistics, the labor force in second quarter of 2020 to 15.6% in the Indonesia in August 2020 increased by next quarter. Meanwhile, the economy 1.74% (YoY) becoming 138.2 million. of Indonesia only increased by 1.83% However, the employed residents from the growth of -5.32% in the second decreased by 0.24% becoming 128.45 quarter to -3.49% in the third quarter of million. The labor force which was 2020 (katadata.co.id., March 1, 2021). unemployed increased significantly by With the strengthening of PEN and 37.61% becoming 9.77 million with the efforts on acceleration of vaccination, the Open Unemployed Rate of 7.07%. The future economic condition is expected impact of this issue was the increase in to be improved. The synergy and active new poverty from vulnerable groups. The action of all parties are also needed so World Bank simulation shows, without that Indonesia can be recovered soon social assistance responses in the amount from this pandemic.
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