State Financial Management During A Pandemic

The prolonged pandemic due to the Covid-19 virus has caused various impacts, especially the economy. Economic activity tends to be sluggish during the pandemic because shopping centers, offices, and schools have had to be closed on several occasions to reduce the spread of the virus, to the point that the country has experienced a recession. Handling the pandemic has also created a burden on the state budget. So, how should state financial management be carried out during a pandemic or in future emergency conditions? Populi Center will discuss it in the Populi Forum entitled "STATE FINANCE MANAGEMENT DURING A PANDEMIC", Thursday (11/18). The discussion was held live at the Populi Center and broadcast via zoom and the YouTube platform.

Appointed as the first resource person, Rofyanto Kurniawan from the Director of State Budget Preparation at the Ministry of Finance, said that the Covid pandemic has created the greatest pressure since the Global Financial Crisis in 2008, where the effects spread like dominoes starting from the health crisis; a social crisis marked by the cessation of economic activities that absorb labor including the informal sector; a sharp decline in economic performance due to hampered investment and contraction of exports and imports; and no exception in the financial sector where investment confidence and real sector performance have declined. Regarding this situation, Rofyanto said that the State Budget is the main instrument in handling the pandemic and national economic recovery (PEN). One of the strategic steps taken was to issue Perppu No. 1 of 2020, which was later amended to Law No. 2 of 2020 concerning State Financial Policy and Financial System Stability for Handling the Covid-19 Pandemic.

Throughout 2021, the government's main focus in the PEN framework is in the health sector, by increasing vaccinations, improving health services, and incentives for health workers; strengthening household consumption followed by the expansion of social protection in cash, and; strengthening the business world and MSMEs through tax incentives and KUR. So far, the results are that the realization of state revenue continues to improve and is approaching pre-pandemic achievements, as indicated by the improvement in the performance of the two main components of state revenue, namely Taxation and PNBP, which also indicates ongoing economic recovery. In addition, tax revenues continue to show improvement and are starting to approach pre-pandemic levels. Then, PNBP was also able to grow very well, especially influenced by PNBP SDA and increasing commodity prices.

The next resource person, an economic observer from the University of Indonesia, Fithra Faisal, highlighted the importance of consistency in the choice of patrons or policy paradigms taken by the government. At the beginning of the pandemic, the government seemed uncertain whether to prioritize public health or improve the drastically declining economic conditions. Making a trade-off between the two is futile because it is sequential. Fortunately, the government immediately realized this mistake, one of which was by issuing a legal umbrella on financial emergencies through Law No. 2 of 2020. Fithra also appreciated the government's steps in issuing the Omnibus Law or what is known as the Job Creation Law. For him, in the current conditions, what is urgently needed is to create an adequate ecosystem that can encourage the haves or rich people to spend, both in the literal sense (shopping) and investment. Meanwhile, steps to impose progressive taxes, which he called the 'cost of their prosperity', can still be done later when the economy has recovered.

The government's treatment of the rich, said Fithra, will significantly affect the course of national economic recovery.

Meanwhile, economic observer from INDEF Aviliani reminded that the government needs to be more careful in being aware of the possibilities in the following year. According to him, 2023 will be a difficult time because it is overshadowed by bad credit and so on. Therefore, in 2022 there needs to be a significant change in the spending model. In addition, funds for PEN must be directed at the demand side, not the supply side. He gave an example in the tourism sector, where incentives can be given to travelers in the form of affordable transportation tickets, as well as to transportation service providers themselves. For him, business credit such as KUR is indeed important, but in the current situation the number of people accessing it is not many because the situation is not yet supportive. Then Aviliani also paid attention to the political year, where in 2022 and 2023 there will be many regions that will be led by Acting Officials who cannot make strategic decisions. He gave an example of the LRT case in South Sumatra which should not happen again, where the current governor is reluctant to take part in maintenance because of the lack of people accessing this mode of transportation. Therefore, regional heads whose terms of office are about to expire must already be thinking about regional development strategies until 2024, so that the Acting Officials can simply continue them until a definitive regional head emerges as a result of the general election.