Economist warns Danantara contributions must not become 'reserve pocket' for State Budget

Jakarta (ANTARA) - M Rizal Taufikurahman, an economist from the Institute for Development of Economics and Finance (INDEF), has warned the government that contributions from a portion of Danantara’s profits should not be treated as a ‘reserve pocket’ for the State Budget (APBN).

Rizal stated that the transfer of funds from the investment management agency to the state treasury must be accompanied by clear explanations regarding budget governance.

“Without a profit-sharing formula and transparent oversight, Danantara risks transforming from an investment manager into a ‘reserve pocket’ for the APBN,” Rizal told ANTARA in Jakarta on Monday.

He explained that Danantara’s contributions, planned to be around Rp120 trillion this year, could theoretically reduce the need for debt issuance by the same amount, provided that all funds are treated as additional revenue and not diverted to fund new expenditures.

If debt issuance remains close to original plans, Rizal believes this policy will not function as fiscal consolidation, but will merely expand the scope of spending.

“The government must explain whether these funds will truly reduce the deficit and interest burden, or simply serve as a patch for weak tax revenues,” he said.

Furthermore, the net increase in revenue from this fund transfer is only Rp30 trillion when compared to the previous trend of State-Owned Enterprise (BUMN) dividend revenues, which hovered around Rp90 trillion per year.

Notably, BUMN dividends originally flowed routinely into the Non-Tax State Revenue (PNBP) category for Separated State Wealth (KND) within the APBN, before being transferred to Danantara following BUMN amendments last year.

Meanwhile, Rizal argued that transferring a portion of Danantara’s profits to the state treasury could potentially reduce the investment funds available to the agency. This means the Rp30 trillion profit does not yet account for the reduction in Danantara’s opportunity costs.

“Fiscal health may be aided today, but the ability of SOEs to create dividends, investments, and asset value in the future may be sacrificed,” he noted.

Previously, Finance Minister Purbity Yudhi Sadewa stated that the transfer of a portion of Danantara’s profits would eventually enter the ‘Other PNBP’ category.

Contributions from Danantara are expected to increase state revenue, thereby helping to keep the APBN deficit under control. These funds could also be used by the government as a fiscal reserve.

However, the state treasurer has yet to confirm whether this policy will continue into the next fiscal year.