The World Bank in the World Bank Country Classifications by Income Level: 2021-2022 reports that Indonesia is back to a lower middle-income country category after being included in the upper middle-income country category in 2019. Indonesia's per capita income fell from US$4,050 in 2019 to US$3,870 in 2020.
According to the Head of the Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu, the health crisis has had a profound impact on social life and global economic activity. The Covid-19 pandemic has brought about negative economic growth in almost all countries, including Indonesia. That’s why, the decline in Indonesia's income is an unavoidable consequence.
Then, what is the government doing to boost the economy? Amid the pressure of the Covid-19 pandemic, the government continues to consistently roll out policies that are focused on efforts to deal with it by strengthening social protection, supporting the business world, including establishing the National Economic Recovery program. Through hard work, the State Revenue and Expenditure Budget and the program, many great benefits have been felt by the community. The National Economic Recovery social protection program is claimed to be effective in maintaining the consumption of the poorest community groups amid the pandemic.
The poverty rate could be controlled to 10.19 percent in September 2020. Without the National Economic Recovery program, the World Bank estimates that Indonesia's poverty rate in 2020 could reach 11.8 percent. This means that the program in 2020 was able to save more than 5 million people from poverty. Furthermore, it is also the engine of economic recovery so that it was able to create 2.61 million new jobs in the period September 2020 to February 2021.
Until now, the pandemic is still ongoing. However, the government continues to work hard and never gives up facing this condition. The increase in daily Covid-19 cases since the end of June was responded quickly with tighter activity restrictions. Acceleration of vaccines, strengthening 3Ts or testing, tracing, and treatment, discipline of health protocols and provision of social protection will continue to be carried out.
Hopefully, the various steps taken by the government to tightly control the pandemic and to recover the economy will raise Indonesia's status back to the category of upper middle-income country. For the record, the classification is usually made by a financial institution or an international donor agency to consider financial assistance facilities for each country.