The government stewards the country’s economy with a clear mandate – to steer the economy to grow at a predictable and sustainable momentum, while keeping inflation in check.
Beyond short-term economic stabilisation, policymakers use Fiscal Policy to help improve human capital, provide a social safety net, deal with climate change, or build food security for longer-term economic resilience.
Indonesia Covid 19 Fiscal Policy Measures
To cushion the impact of the Covid-19 outbreak on businesses and individuals, here are some examples of fiscal measures that the Indonesia Government has put in place.
Note: Information presented is non-exhaustive.
Source: Indonesia Ministry of Finance.
How Fiscal Policies work
Fiscal policies work through multiple channels:
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Changes in tax rates can alter the savings, investment, and spending pattern of the public and companies.
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Direct cash support schemes help boost consumer demand for goods and services.
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Job programmes support employment.
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Public sector infrastructure projects boost the economy’s efficiency and the potential to innovate and grow.
Conversely, the government may raise taxes - a contractionary measure, to tamper down unsustainable growth to prevent economic bubbles from occuring.
Key pitfalls of Fiscal Policies
The policy's effectiveness could potentially be compromised when:
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There is a policy lag - the interval from its implementation to the realisation of its impact.
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The intended outcome failed to move the economy in the desired direction.
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Policymakers are not able to accurately determine the size and composition of the measures.
Investment Opportunities in the midst of an economic adjustment
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