Battle of Multifront Economy

By: @refki

First of all, I would like to say sorry in the birth and inward, Happy Eid al-Fitr 1439 H.

On the sidelines of our joy to celebrate the feast of Eid al-Fitr, I hope that this paper will not disturb our joy to gather and stay in touch with family, kinsman, relatives and friends.

Since the second part of this series I share. There are some advanced events that are not less interesting, especially those related to the state of the Indonesian economy. Since the joint release of BI, OJK, LPS and MoF followed by a number of policy measures, there is little "calm" atmosphere in the market (hopefully not "calm before the storm).

There are two statements made by the mother of Sri Mulyani (Menkeu) interesting to note. Just a note, the statement was planned very mature and measurable. The first statement concerns the impact of rising fuel prices on the state budget. The second statement relates to "debt management" (Debt Management). The first statement was delivered before a meeting of the House of Representatives' Commission of Finance while the second statement was in a special interview with one of the national media.

In the first statement, SMI's mother asserted that the fuel price hike will be positive to APBN. Because with the reduced burden of fuel subsidies in the posture APBN, the increase will increase the "revenue" side of the state budget. Coupled with the depreciation of the rupiah against the US Dollar, which of course will result in foreign exchange gains for the state budget.

I am happy with this statement. Not at all wrong, clear, but not "honest". What is not "honest" is what I will share. Indeed, this SMI mother has the ability oratori solid economy. And often drugged.

Where is not "honest" it ?. In my opinion, he did not closely relate the statement to the risks of fuel imports that are already close to 750 thousand barrels per day by the "state finance" entity named PERTAMINA. Our APBN is healthy, but the risk is still "looming". Alias, the revenue gain from oil price hike is still held hostage by performance off balance sheet of Pertamina's financial performance.

I use off balance sheet terms to show that the risks Pertamina is facing are essentially equivalent to the risks that may arise suddenly in the state budget. The urgent magma, will be the hot lava that runs fiscally.

I am trying to understand the "bull field" policy dilemma. Explaining these risks to stake holders in the House of Representatives will leave an uncomfortable question by 2019. The question is, will the government allow PERTAMINA to adjust its fuel prices to offset the world oil price trend? Or will the government force pertamina to absorb financial risk (due to price gap) by not making price adjustments? or will the government decide to close the price gap by adding subsidies in the state budget (which also means offsetting revenue from APBN revenues)? let's wait for how policymakers answer these questions.

As I write this, I imagine the authorities are calculating the financial risk of pertamina, combining the possibility of politically inexpensive price adjustment (not economically !!) with Pertamina's ability to absorb financial risk. Calculate the profitability of the increase in world oil prices that can be used to reduce Pertamina's burden (of course in the form of additional subsidies) while considering the concerns of bond holders (who are often bapper) who are allergic to consumption subsidies. Alternatively, it spreads the financial risk in the following fiscal years. lets see...

While on the other side, the authority in "thamrin" continues to struggle to create exchange rate stability. Anticipating the need for dollar pertamina. Synthesizing non-myopic mixed policies; APBN profit but BI foreign exchange reserves eroded.

The second statement, about debt management strategy. I think, the Ministry of Finance has a projected APBN scenario that underlies the statement (i hope so). The core strategy is deficit control, primary balance refinement, tax revenue optimization and adoption of debt revolving strategy.

the application of such debt management, suggests that the government's "debt cravings" are beginning to decline or control (thanks to debt critics). This is a rational legowo attitude. Hopefully this is a sign that the "bull field" is aware of the excessive effect of the debt system that was applied some time ago.

My guess is that SMI's mothers in the interview use the term revolving (the opposite of installment), which actually declares a "new" pattern of government debt consumption. Debt is consumed maximally by ceiling. Forested at times of need, not when having a "passion". the first, shows the efficiency and effectiveness of debt. the second, showing negligence, over debt and waste.

Revolving, in order to be prudent, requires control; control on the "consumption" desire, control of spending intentions beyond the plan. And most importantly, the desire to evaluate unnecessary debt.

Mrs. Sri Mulyani, you just introdusir the term "revolving" in the treasury of state debt management. By that term you are showing "the right direction" of the "perversion" of our current debt. You dare to do otokritik. Debt is not forbidden and frightening goods. But this nation is afraid of the debts that ensnare and deceive. Regards. @refki