VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

The Indonesian Finance Ministry and Bank Indonesia continued burden sharing through the third joint decree (SKB). The burden sharing to overcome Covid-19 pandemic is effective until December 31 2022.

Minister of Finance, Sri Mulyani Indrawati in a press conference in Jakarta, Tuesday (24/8) said that the third joint decree was caused by the spike in Delta variant that requires a lot of funding, including for health and social treatments.

In general, the policy synergy in the third joint decree still holds the important principles of the fiscal, namely keeping the fiscal space and fiscal sustainability, or fiscal continuity for mid-term, as well as maintaining a productive quality spending. It also supports fiscal consolidation with deficit reduction policy in stages to be under three percent starting from 2023.

In the joint decree, Bank Indonesia will buy sovereign debt papers –SBN worth Rp 439 trillion, consisting of Rp 215 trillion in 2021 and Rp 224 trillion in 2022.

The sovereign debt papers issuance scheme is divided into two clusters. First, Bank Indonesia contributes to all interest costs for vaccination and Covid-19 health treatment. Then, the government bears the interest rate from sovereign debt papers issuance for Rp157 trillion in 2021 and Rp 184 trillion in 2022, with a three-month tenor of BI reverse repo rate.

The sovereign debt papers issuance whose interest rate was paid by the government will be used for health and social treatments. The health treatment budget includes vaccination, diagnostics (testing, tracing, treatment), therapeutic or Covid-19 patients treatment costs, incentive for health workers, medicine, health equipment, Covid-19 handling in regions, and other Covid-19 related health treatments.

While the social treatment budget includes funding for various protection programs for affected underprivileged people.

Governor of Bank Indonesia, Perry Warjiyo in a press conference affirmed that the state budget burden sharing extension will not reduce Bank Indonesia's independence as a central bank. 

He also said that the third joint decree will not affect the financial condition of Bank Indonesia. Although the cooperation will expand the deficit, Bank Indonesia's capital is still very huge and enough to maintain the continuity and financial condition of the central bank.