Jakarta –
The war between Russia and Ukraine has an impact on the global economy. Indonesia is not expected to be spared from this impact.
Vice Chancellor of Paramadina University Handi Risza hopes that this war will not last long. Besides having a bad impact on the global economy, war will also add to the burden on the state budget due to the increase in world oil prices which have reached US$ 120 per barrel.
“Meanwhile, the assumption of the state budget is still at a price of US$ 63/barrel, and the burden of energy subsidies will also increase. This condition is a fiscal policy challenge that is not easy and must be overcome by the government and the DPR,” he said in the discussion on ‘Fiscal Burden and the Russia-Ukraine War’, Tuesday (8/3/2022).
He continued, Indonesia’s economic growth in the last 6-7 years was only around 5%. This figure is still below the New Order era which reached 7-8% or the era of President Susilo Bambang Yudhoyono (SBY) which reached 6.5%.
According to him, Indonesia’s economic conditions are not yet ideal and the war is getting tougher. He said, Indonesia was threatened with a middle-income trap.
“So it’s still not ideal and actually the economy has not been doing well since before COVID and is more likely to be tough after COVID and the Russia-Ukraine war. There is also the threat of a middle income trap,” he said.
INDEF economist Eisha M Rachbini said the Russia-Ukraine war increased the risk of an energy crisis and the threat of inflation. Obviously, high oil prices will have an impact on production costs. The Russo-Ukrainian war also led to disruption of the global supply chain, which could have an impact on rising commodity shipping prices.
“This war will put pressure on the recovery of the world economy, especially on the supply side and the demand side. So, the risk going forward, the threat of inflation could reduce people’s purchasing power, and could risk hampering economic growth,” he said.
He added, if the price of oil is still high, the price of basic needs will increase. Then, if the government provides subsidies, it will put pressure on the state budget.
“In the future, if the price of crude oil is persistently at a high level above US$100 per barrel, the price of basic commodities will increase, price increases are unavoidable. The government, for example in the form of price intervention, providing subsidies, social assistance, will provide pressure from the state budget deficit. So that the state budget needs to be managed appropriately and efficiently, by prioritizing economic recovery, maintaining people’s purchasing power and economic growth,” he explained.
Watch Video: Ukrainian Volunteers Build Public Kitchens for Military and Citizens
(acd/dna)
–
