Economist says Danantara's contribution to state budget could reduce debt needs
Center of Reform on Economics (CORE) economist Yusuf Rendy Manilet has assessed that the contribution of part of Danantara’s profits amounting to Rp120 trillion could reduce the financing needs of the State Revenue and Expenditure Budget (APBN).
“If the Rp120 trillion actually comes in and is not followed by additional spending of the same value, the financing requirement could fall quite significantly,” Yusuf said when contacted by ANTARA in Jakarta on Monday.
He explained that the transfer of funds could give the government room to reduce the issuance of Government Securities (SBN) or supply pressure on bonds in the market.
Under such conditions, Yusuf argued that interest costs could also potentially be more controlled and pressure on private financing could ease somewhat.
However, Yusuf continued, if the funds are used to finance new spending, the benefit in terms of debt reduction would of course be smaller.
“So what matters is not only how much money comes in, but how that money is used within the APBN,” he added.
In general, the current scheme appears to provide more advantages than the old scheme.
For context, dividends from state-owned enterprises (BUMN) previously flowed regularly into the Non-Tax State Revenue (PNBP) account for Separated State Assets (KND) within the APBN, before being diverted to Danantara following last year’s amendment to the BUMN Law.
The annual dividend contribution from BUMN was previously said to be around Rp90 trillion per year.
“But the comparison cannot be judged solely by the figures. The previous KND contributions were relatively regular and easier to project within the APBN. Meanwhile, contributions from Danantara depend more on investment performance and government decisions,” Yusuf explained.
“In addition, every amount of money withdrawn into the APBN means there are funds that Danantara does not use for long-term investment. So there is an opportunity cost that needs to be taken into account,” he said again.
Beyond that, Yusuf argued that this decision also concerns Danantara’s credibility.
In his view, if the institution is to be positioned as a commercial, long-term oriented state investment manager, the market will certainly look at how clear the boundary is between investment funds and the government’s fiscal needs.
“A large transfer to the APBN is not always negative, but it must be transparent so that investors can distinguish between genuinely new investment profits and receipts that are essentially a re-transfer of BUMN dividends which previously were already a source of state revenue,” he said.