economy

The Economist Assesses That Danantara Facilitates A Simpler Recording Of The State Budget (APBN)

The economist from Paramadina University, Wijayanto Samirin, believes that the transition of dividends from State-Owned Enterprises (BUMN) to the Investment Management Agency (BPI) Danantara simplifies the recording of the State Revenue and Expenditure Budget (APBN).

"In fact, the existence of Danantara makes the recording of the APBN simpler, thus limiting the opportunities for financial engineering to make the APBN appear more attractive," Wijayanto stated during a phone interview in Jakarta on Monday.

He elaborated that the financial engineering referred to occurs when the government provides substantial state capital participation (PMN) funded by debt, and then the BUMN pays out large dividends.

This strategy is seen as making the APBN deficit appear lower, while the government’s debt actually increases.

"This has been happening for decades; hence, the APBN deficit has consistently remained below 3 percent of the gross domestic product (GDP), while the debt-to-GDP ratio has continuously surged," he added.

According to him, although the government loses a source of revenue due to the transfer of dividends to Danantara, the government's responsibility regarding PMN is also transferred. This means there is a reduction in revenue (cash inflow), but there is also a reduction in PMN responsibility (cash outflow).

"Therefore, from a cash flow perspective, the impact is not significant, especially considering the substantial funding needs for the restructuring of state-owned enterprises (SOEs) that will arise in the coming years (including SOEs in construction, pharmaceuticals, and Garuda). In fact, the government stands to benefit in terms of cash flow," he stated further.

However, he added, dividends are recorded as income, while the state capital injection (PMN) is not included as part of the expenditures in the state budget (APBN), as it is considered an investment.

"Thus, with the presence of Danantara, the APBN may appear worse off, even though it does not truly have an impact," he remarked.

Previously, the government, through the Ministry of Finance, has been striving to enhance non-tax state revenue (PNBP) from various sectors beyond the contributions from SOE dividends.

PNBP is projected to reach only Rp477.2 trillion, or 92.9 percent of the target of Rp513.6 trillion.

Nevertheless, the government is taking measures to mitigate the negative effects of the fund transfer so that they do not fully materialize. Sri Mulyani indicated that they are working to limit potential revenue losses to just half, compensating for the remainder through new revenue streams.

"With several measures, we will reduce the mitigation, so the difference may only be around Rp40 trillion. This means that PNBP is seeking an additional new revenue of Rp40 trillion, ensuring that the correction of Rp80 trillion does not entirely manifest there," she added.

Tag: APBN Paramadina University Wijayanto Samirin