The effectiveness of the Pandemic Antidote Fund – The 2019 Coronavirus Disease (Covid-19) outbreak has paralyzed the economy. The Government responded by issuing Government Regulation in Lieu of Law No. 1 of 2020 concerning State Financial Policy and Financial System Stability for Handling Covid-19 Pandemic. With this regulation, the government will make various budget adjustments and shift it to the handling of the epidemic.
Sources of funding used include the remaining excess budget (SAL), endowment funds and the accumulation of endowment funds for education, funds controlled by the state, funds in public service entities, as well as funds originating from reducing state capital participation in state-owned enterprises (BUMN). The government will also issue state debt securities and / or state sharia securities to be purchased by Bank Indonesia, SOEs, corporate investors and retail investors. The government will also determine the sources of budget financing from domestic and foreign sources.
The effectiveness of the Pandemic Antidote Fund
The government should relocate a portion of the infrastructure budget to overcome the Covid-19 pandemic as stated in the 2020 State Revenue and Expenditure Budget (APBN) of Rp 419.2 trillion. When compared to the infrastructure budget, the endowment and the accumulation of endowment funds for education are only about half, which is Rp. 60 trillion.
The government should not use education endowment funds to overcome the pandemic. Education is one of the factors driving economic growth (Chapman and Withers, 2002; Barro, 1991; Lucas, 1988). Education will increase the number and quality of the workforce so that productivity will also increase.
The issuance of state debt must also be watched out, bearing in mind the total public debt in 2019 of Rp 9,818.54 trillion, consisting of central government debt of Rp 4,700.5 trillion, BUMN financial debt of Rp 4,125.04 trillion, and debt of non-sector SOEs finance of IDR 944.92 trillion (SUSPI Bank Indonesia, 2020). The issuance of debt securities means opening a widening deficit, which increases debt interest payments, extends the period of debt repayments, and narrows fiscal capacity. If the depreciation of the rupiah continues, this will raise the interest of government securities (SBN), so that the cost of attracting debt will increase. Scenarios for the purchase of SBN or equity participation by SOEs will burden SOE performance and the risk will increase.
Options other than debt that can be considered by the government is to reduce non-productive expenditure on goods expenditure items, especially for official travel, meetings and honorariums for activities. The use of other expenditure items is optimized to support the implementation of policies to anticipate changes in basic macroeconomic assumptions, to provide operational costs for institutions that do not yet have their own budget section codes, support food security, reserve funds for new employee salaries, natural disaster reserve funds, other reserve funds relating to staffing policies, supporting Indonesia’s membership in the United Nations Security Council (UN), and reserve funds for urgent needs.
The effectiveness of the Pandemic Antidote Fund. Some village funds and special allocation funds can be diverted to handle and mitigate the dissemination of Covid-19 at the village level. First, village funds are allocated through direct cash assistance to the poor in the village or workers affected by termination of employment and migration from cities to villages.
Second, village funds must also be allocated to productive matters to support food production, for example subsidized input goods (fertilizers, pesticides, agricultural equipment). Third, village funds can also be allocated to facilitate the distribution of food from the village to the city so that food supplies run smoothly, given that some food commodity prices in the city have gone up, even scarce. Poker Online Manado
Adjusting the income tax rate for domestic corporate taxpayers and permanent establishments is certainly another next challenge because the tax ratio will go down. So, in the next period, the tax ratio needs to be increased to finance the state budget because in this period it is clear that tax revenue and non-tax national income (PNBP) will decrease. Moreover, the tax ratio trend since 2008 continues to decline, from 13.31 in 2018 to 10.50 in 2018 (World Bank and Ministry of Finance, 2019). Continuing tax revenue requires new breakthroughs, such as providing tax incentives that are associated with subsidies or benefits that will be obtained if people pay taxes. The effectiveness of the Pandemic Antidote Fund.
The authority of the Minister of Finance to provide customs facilities in the form of exemption or relief of import duties is expected to be utilized to facilitate food supply. Moreover, there is a risk of decreased ability to work (productivity) for work that is outdoor because of climate change and the risk of crop failure is greater (McKinsey Global Institute, 2020). In addition, this pandemic has the potential to reduce investment, hamper access to food, reduce production capacity in the food industry, and reduce food supply from abroad and hamper food distribution.
The smooth supply of food is very urgent to reduce the volatility of food prices which causes an increase in inflation, so that the speed of food imports from abroad and the smooth distribution of food are needed at this time. This authority is also expected to facilitate the importation of health infrastructure, bearing in mind that the supply of personal protective equipment, drugs, vitamins and other medical devices is still relatively lacking.