Government Urged to Uphold Credibility Amid Economic Pressures

Jakarta (ANTARA) - Great Institute researcher Yossi Martino has urged the government to maintain its fiscal, institutional, and macroeconomic credibility amid intense pressure on the current economy.

“The government needs to maintain three credibilities at once. First, fiscal credibility, which is ensuring major programmes have clear priorities, financing sources, and risk limits,” he said in a statement in Jakarta on Thursday.

Second, the government is also being asked to maintain institutional credibility by ensuring strategic programmes have governance, performance indicators, evaluation, and open oversight. As carried out with the MBG programme, the government must continue to strengthen the governance of the Koperasi Merah Putih through adequate supervision, reporting, and accountability systems.

“Various doubts that have developed in society regarding programme governance, including allegations of budget mismanagement, need to be clarified immediately through independent, transparent, and fact-based investigations,” he said. He stated that transparency of investigation results by authorised institutions is a crucial prerequisite to strengthening institutional credibility and maintaining public trust in the programme.

Third, the government also needs to maintain macroeconomic credibility by safeguarding Bank Indonesia’s independence, rupiah stability, and fiscal-monetary coordination without blurring the responsibilities of each authority. “BI’s independence must be upheld not to please the market, but to protect the people’s purchasing power. Fiscal discipline also does not mean rejecting people’s programmes, but rather ensuring people’s programmes can be financed sustainably. Business certainty does not mean handing the economy over to corporations, but creating an environment where investment, production, exports, and job creation can proceed with measured risk,” he said.

Yossi assessed that the government is currently transforming the economic order from one previously heavily reliant on orthodox macroeconomic stability and market-driven mechanisms, towards a developmental state model that is more state-driven. The market turmoil currently occurring is essentially a phenomenon that can be read through the lens of Institutional Change Theory. Referring to structural political-economic thought, every transformation effort—such as overhauling the trade system’s rules of the game through Danantara or restoring the state’s role in wealth distribution through the Free Nutritious Meals (MBG) programme—tends to disrupt the old equilibrium and trigger friction.

“What the market is testing today is not the good intentions of these social changes, but whether this transition period is managed with certainty. When the market begins to doubt the fiscal direction or the governance of strategic programmes, the economic cost will return to society through a weaker rupiah, higher interest rates, and narrower fiscal space,” he said.

Responding to this dilemma, Yossi stressed the importance of applying the principles of Pancasila economics into modern economic policy. Quoting the perspectives of Bung Hatta and Professor Mubyarto, he explained that the state is obliged to be present when market mechanisms fail to produce social justice. He said Pancasila economics is not an anti-market economy, but also not an economy that hands the direction of development entirely over to the market. The market, he continued, must be positioned as a resource allocation mechanism, while the ultimate goal remains the welfare of the people.

“Human resource investment through MBG, for instance, is a constitutional mandate. However, this programme must be guarded against wastefulness. MBG must be based on the priorities of stunting-prone areas and involve local supply chains so that it becomes a driver of regional economies, not merely consumer spending,” he explained.

Yossi also noted that Pancasila economics must not be reduced to a mere slogan. Its measure of success lies in its ability to generate inclusive growth, maintain economic stability, and expand public welfare.

“Ultimately, the quality of implementation that is free from corruption, accountable, transparent, and compliant with the law will be far more decisive for the direction of the Indonesian economy going forward,” said Yossi.