Fiscal Crisis Is Already Here
Finance Minister Purbaya Yudhi Sadewa asks for state-owned enterprise profits to go into the state budget, not Danantara.
Fiscal crisis has already arrived, according to Finance Minister Purbaya Yudhi Sadewa. The state-owned enterprises, once a source of revenue, are now causing budget problems. Danantara, the holding company for SOE profits, is fighting with the government over those profits. Finance Minister plans to withdraw Rp120 trillion in SOE profits, but the new SOE Law requires profits to first go to Danantara for reinvestment.
The investment returns have yet to materialize, and the situation is already contentious. The minister does not have the authority to directly withdraw funds into the state treasury, as he did before the SOE Law revision. Purbaya is relying on a presidential order to justify his demand, but Danantara executives claim they were unaware of any such decision.
The minister is also facing other urgent demands, such as paying loans for cooperative development by the end of September and meeting the maturity of Rp174.4 trillion in government bonds this month. These demands risk violating the State Finance Law, as the budget deficit could exceed 3 percent of GDP. President Prabowo's favored projects, like the free nutritious meal program, also add to the fiscal burden.
Energy subsidies may increase due to rising global oil prices, further weakening the rupiah and widening the balance-of-payments deficit. Bank Indonesia may need to raise interest rates or create new investment instruments to manage the situation. The economy is expected to become even more chaotic, and the fiscal crisis is already serious.
Written by urgent.news from Tempo.co English's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
