Fiscal Room to Drive Consumption

KOMPAS/KARINA ISNA IRAWAN

Finance Minister Sri Mulyani Indrawati (left), Head of the Fiscal Policy Office (BKF) of the Ministry of Finance Suahasil Nazara (center), and Finance Ministry Director General of Budget Askolani (right) discuss before starting a meeting with the DPR Budget Board in Jakarta on Wednesday (17/10 / 2018).

JAKARTA, KOMPAS – The government is thought to have enough fiscal room to stimulate economic growth through labor-intensive programs and other productive activities. The stimulus can be provided if the fiscal management is not too tight.

Bank UOB Indonesia chief economist and researcher Enrico Tanuwidjaja believes that a tight state budget is a double-edged sword. A small state budget deficit reflects the government\'s ability to maintain financial stability amid fluctuating exchange rates and global pressures. On the other hand, a tight state budget can slow economic growth. "If this year\'s state budget posture is similar or tighter than in 2018, it is not good for economic growth. In fact, the government has the room to increase fiscal spending," Enrico said in Jakarta on Thursday.