2023 State Budget realisation: Goods & capital spending stalled
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Serapan APBN 2023: Belanja barang & modal seret
15 March 2023
By: Maria Elena and Wibi Pangestu Pratama
Goods, services, and capital spending realisation from January to February of this year contracted on a year-on-year basis following tenders that are reckoned to still be in the early stages.
Finance Minister Sri Mulyani Indrawati revealed that state spending until the end of February 2023 reached Rp287.8 trillion or 9.4% of the 2023 state budget (APBN) ceiling.
Spending realisation increased by 1.8% on a year-on-year (YoY) basis. From that amount, the central government’s spending realisation reached Rp182.6 trillion or 8.1% of the ceiling of the 2023 APBN.
The spending of ministries and institutions reached Rp76.4 trillion or 7.6% of the 2023 APBN.
For this post, the main spending is utilised to accelerate the distribution of the school grants program (BOS), equipment/machine procurement, buildings/structures, facilities and infrastructure/logistics, road maintenance/network/irrigation/state assets (BMN), social aid distribution, and ministry/institution operation.
“We want to accelerate ministry/institution spending, such as the school grants program (BOS), in the first quarter of 2022 for PKH (Family Hope Program) [spending],” he said during a press conference titled APBN Kita on Tuesday (14/3).
Meanwhile, for the non-ministry/institution post, realisation until the end of February reached Rp106.2 trillion or 8.5% of the 2023 APBN ceiling.
However, the spending increase only occurred in employee spending and other spending that increased by 5.4% YoY and 11.6% YoY respectively. Meanwhile, goods and services spending as well as capital spending contracted by 1.3% and 17.5% respectively.
In her explanation, Sri Mulyani mentioned that the increase in employee spending is caused by the payment of additional income for regional civil servants (ASNs) as well as salaries and benefits of regional heads and/or deputy regional heads.
Other spending that increased by 11.6% includes subsidy spending, social aid spending, interest spending, grant spending, profit sharing spending, and unexpected spending.
Goods and services spending contracted slightly by 1.3% due to the decrease in BOS goods and services spending and regional public service board (BLUD) goods and services spending.
“Capital spending has contracted by 17.5% due to the goods and services procurement process that is still in the early stage,” she said.
However, in terms of functions, spending from January to February 2023 for the economy increased by 10.26% YoY to Rp4.44 trillion.
Moreover, spending for social protection increased by 10.76% from Rp0.48 trillion in January-February 2022 to Rp0.53 trillion in January-February 2023.
Meanwhile, spending for health decreased by 11.6% YoY to Rp6.4 trillion
“Spending for the economy and social protection grew, while spending for health decreased. This is in line with the increase in economic activities and the handling of Covid-19 cases,” she explained.
Less than flexible
On the other hand, Institute for Development of Economics and Finance (Indef) Centre of Macroeconomics and Finance Head M. Rizal Taufikkurahman sees that the lack of state expenditure absorption from January to February 2023 was caused by a less than flexible fiscal consolidation that is too tight and too selective towards projects that will be realised.
“This condition shows that the risk this year is quite high. However, the boost to state spending to be more productive is the right choice to pursue and accelerate economic growth recovery,” he said to Bisnis on Tuesday (14/3).
According to him, productive spending has to be boosted to speed up economic acceleration, such as spendings for machine procurement, logistics facility repair and procurement, buildings and structures, social aid distribution, and market acceleration facilitation.
“Productive spending will increase added value for the economy. Spending is crucial, especially to boost economic growth,” he said.
Meanwhile, Centre of Economic and Law Studies (Celios) Director Bhima Yudhistira revealed that spending realisation from January to February 2023 was still low.
“Ideally, [the realisation] in February needed to surpass 15% to accelerate growth, especially in regions,” he said to Bisnis on Tuesday (14/3).
According to him, the government can accelerate budget disbursement for goods and services procurement, micro loan interest subsidy for micro, small, and medium enterprises (MSMEs), social aid, as well as infrastructure programs. “The bottleneck has always been the bureaucracy between the central and regional governments that needs more intense coordination, as well as the lack of sanctions for regional governments that are late in executing their budget.”
