Finance Minister Purbaya Yudhi Sadewa asks for state-owned enterprise\nprofits to go into the state budget, not Danantara. The fiscal situation\nis in the red.<\/p>\n
TOUTED as the manager of state-owned enterprise dividends for major\ninvestments, Danantara\u2019s executives are instead fighting with the\ngovernment over profits. Finance Minister Purbaya Yudhi Sadewa is\nscrambling to plug the fiscal hole caused by President Prabowo\nSubianto\u2019s major projects. He plans to withdraw Rp120 trillion in SOE\nprofits.<\/p>\n
The problem is that under the new State-Owned Enterprises Law, SOE\nprofits must first go to Danantara. The SOE holding company will\nreinvest the profits in the hope of generating greater returns. That is\nthe theory. In reality, the investment returns have yet to materialize,\nand the profits are already being fought over.<\/p>\n
As separated state assets, state-owned enterprise assets now belong\nto Danantara, which reports directly to the president. Minister Purbaya\nno longer has the authority to withdraw the funds directly into the\nstate treasury. Before the State-Owned Enterprises Law was revised, the\ndividends were directly recorded as non-tax state revenue in the State\nBudget.<\/p>\n
With no legal basis to claim the profits, Minister Purbaya is relying\non a presidential order to justify his demand. He claims the withdrawal\nof SOE profits was decided at a limited meeting attended by Danantara\u2019s\nmanagement. The problem is that Danantara executives say they were\nunaware of any such decision.<\/p>\n
Purbaya may have run out of options to cover government spending. He\nalso has to pay Rp40 trillion in installments on loans for the\nred-and-white cooperatives\u2019 development to state-owned banks by the end\nof September. Then there are Rp174.4 trillion in government bonds\nmaturing this month. Government spending also typically increases in the\nsecond half of the year.<\/p>\n
With these demands, Purbaya risks violating the State Finance Law\nbecause the budget deficit could exceed 3 percent of gross domestic\nproduct. In this year\u2019s State Budget, the government projects a deficit\nof 2.85 percent, up from the initial target of 2.68 percent.<\/p>\n
In addition to President Prabowo\u2019s favored projects, such as the free\nnutritious meal program and the red-and-white cooperatives, there are\nseveral major expenditures in the short term. Energy subsidies could\nswell as global oil prices rise due to the unresolved war in Iran. In\nearly July 2026, global crude oil prices rose again to US$109 a barrel,\nfar above the State Budget assumption of just US$70.<\/p>\n
The rising value of oil imports could also further weaken the rupiah,\nwidening the balance-of-payments deficit. As a result, foreign exchange\nreserves could also be depleted. Bank Indonesia may have to raise\ninterest rates or create new investment instruments to attract rupiah\nback, similar to Bank Indonesia Rupiah Securities. These\nrupiah-denominated debt securities can help prevent the exchange rate\nfrom plunging, but they come at a high cost because of their high\nyields.<\/p>\n
The economy will become even more chaotic. Even after Bank Indonesia\nsteps in, the fiscal situation is becoming increasingly disorderly.\nBefore the dispute over state-owned enterprise profits, Purbaya had\nalready withheld tax refunds owed to taxpayers. Now he plans to use\nrevenue-sharing funds to repay regional governments\u2019 debts to Sarana\nMulti Infrastruktur, an SOE under the Finance Ministry. After cutting\nregional transfer funds and village funds, Purbaya is still taking money\nthat belongs to regional governments.<\/p>\n
The fiscal crisis is already here. Get ready for worse.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/fiscal-crisis-is-already-here-1789703459", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }