Jakarta (ANTARA) - An economist from the University of Indonesia, Fithra Faisal Hastiadi, has suggested that the government take advantage of the lower state budget deficit to undertake supply-side interventions.
"The lower state budget deficit is an opportunity for the government to intervene in terms of supply," Hastiadi said when contacted by ANTARA in Jakarta on Thursday.Supply-side interventions are required to anticipate probable food and resource shortages or inputs for production in 2024, he explained.
"The government can provide incentives or subsidies to the industry to be able to survive in the midst of pressure on production costs," he expounded.
Although the state budget deficit has declined, Hastiadi said he believes that the government must remain vigilant against global risks that could affect the Indonesian economy.
The risks include geopolitical uncertainty, rising inflation, and climate change phenomena such as the El Nino.
"The government needs to prepare fiscal instruments to anticipate these risks," he said.
Furthermore, the decline in the state budget deficit has not only been caused by economic recovery, but also by efficiency in government spending.
In 2023, government expenditure was increasingly focused on assisting the economy's recovery and enhancing competitiveness, he said.
The reduction in the 2023 State Budget deficit shows that the government has successfully made gradual fiscal adjustments.
"The decline in the state budget deficit shows that the government has succeeded in smoothing out very high deficits in 2020 and 2021," Hastiadi said.