DIGIVESTASI - Indonesia is considered one of the most successful countries in implementing fiscal policy, which has proven effective in overcoming the Covid-19 pandemic crisis. Over the past decade, fiscal policy through the state budget has been directed to fulfill three main functions, namely allocation, distribution, and stabilization. In his State Budget 2025 Financial Note speech, President Joko Widodo revealed that the government's fiscal policy has succeeded in reducing the extreme poverty rate from 6.1% to 0.8% in the last 10 years, as well as maintaining stable economic growth.

“Indonesia is among the few countries that are able to recover quickly and even continue to grow. Our economic growth has been maintained above 5%, while many countries have experienced an economic slowdown,” the President said in August 2024. The President also explained that a number of fiscal policies had been issued to deal with the crisis situation. One example is the budget allocation of Rp361 trillion through the Healthy Indonesia Card (KIS) program, which opens access for 92 million poor people to health services, including Puskesmas and advanced health facilities. In addition, scholarships worth IDR113 trillion in the Smart Indonesia Card program have been distributed to 20 million students, while IDR225 trillion was given to 10 million participants of the Family Hope Program, and IDR60.3 trillion was allocated for the Pre-Employment program.

In addition to focusing on social welfare programs, the government also managed to control inflation in the range of 2%-3%, at a time when many countries experienced significant inflation spikes, some even reaching more than 200%. Since taking the helm in 2014, the government has made various fiscal adjustments in terms of expenditure and revenue. One of the first steps was the transfer of fuel subsidies to more targeted programs, such as infrastructure development and social assistance. National development projects were then covered under the national strategic program.

The government also launched regulatory reform through Economic Policy Package I-XIII, which included 204 deregulation items. On the revenue side, reforms were carried out by implementing the tax amnesty program, which aims to broaden the tax base and repatriate the assets of Indonesians held abroad. In addition, budget efficiency continues to be optimized through the Electronic Procurement Service (LPSE), which promotes transparency and efficiency in state spending.

Another major step was the implementation of Law No.7 of 2021 on Harmonization of Tax Regulations, which aims to strengthen state revenue. In the financial sector, the government also strengthened regulations by passing the Financial Sector Development and Strengthening Law (P2SK Law). The Chief Executive Officer of OJK, Friderica Widyasari Dewi, in September 2023 assessed the P2SK Law as an important breakthrough that adapts the financial industry to the demands of the times. The law amends 17 regulations in the financial sector, including the Capital Market Law and the banking sector, which were last revised more than two decades ago. Friderica emphasized that rapid technological innovation requires adjustments to the rules in this sector.

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