Appreciating the Government’s Efforts to Distribute Social Assistance to Maintain People’s Purchasing Power
The Indonesian government continues to demonstrate its commitment to strengthening social protection in response to the significant increase in rice prices. Economist from Mirae Asset Sekuritas, Rully Arya Wisnubroto, highlighted the government’s steps aimed at maintaining people’s purchasing power amidst these economic challenges.
Rully emphasized that the government has sufficient space to act as a ” shock absorber ” by allocating a social protection (perlinsos) budget of IDR 496 trillion for 2024. This figure has experienced a significant increase compared to the realization of the social protection budget in the previous year, which reached IDR 443.4 trillion. trillion.
This social protection is mainly strengthened in the form of food assistance to communities experiencing the direct impact of rising rice prices. This assistance is very important to maintain people’s purchasing power amidst the price of premium rice which reaches IDR 15,000 to IDR 16,000 per kilogram in several regions in Indonesia. Even though the price of rice has increased, the government continues to emphasize that there will be no adjustment to the highest retail price (HET) of this basic commodity.
The increase in rice prices is also predicted to have an impact on inflation, with inflation predicted for February 2024 reaching around 7 percent year on year (yoy), while overall inflation is projected to reach 2.6 percent (yoy). Apart from rice, price increases will also be felt for other food ingredients such as garlic, shallots and sugar.
As a proactive step, the government has increased the social security budget in the 2024 Draft State Revenue and Expenditure Budget (RAPBN) by 12.4 percent of the 2023 APBN outlook. This budget increase aims to reduce poverty levels and support people in the bottom 40 percent income group.
In the increase in the social security budget, programs such as the Family Hope Program (PKH) and Basic Food Cards increased by IDR 7.4 trillion to IDR 81.2 trillion. The budget is also allocated for the Smart Indonesia Program (PIP), KIP Kuliah, National Health Insurance Contribution Assistance Recipients (PBI JKN), contribution assistance for class III non-wage earners and non-workers (PBPU BP), as well as various other social assistance programs, reaching the total budget amounting to IDR 82.3 trillion.
Apart from social assistance programs, the social assistance budget is also allocated for energy and non-energy subsidies, with a total energy subsidy reaching IDR 185.9 trillion, which includes subsidies for electricity, fuel oil (BBM) and 3 kilograms of LPG.
The Coordinating Minister for Human Development and Culture (Menko PMK) Muhadjir Effendy recently stated the allocation of Social Protection (Perlinsos) funds worth a total of IDR 490 trillion in 2024. However, it is important to understand that this allocation is not only intended for the poor.
The difference between the Social Security Program and the Social Assistance Program (Bansos) needs to be clearly understood. According to Coordinating Minister Muhadjir Effendy, Perlinsos includes subsidies such as fuel subsidies, LPG subsidies, electricity subsidies, fertilizer subsidies and People’s Business Credit (KUR) interest subsidies. Meanwhile, Social Assistance is part of the Perlinsos Program, which is realized through the allocation of funds amounting to IDR 97 trillion by the Ministry of Social Affairs (Kemensos) for economically disadvantaged residents.
The allocation of social assistance funds does not include additional allocations allocated by other ministries/institutions, such as from the Food Security Program amounting to IDR 190 trillion. Thus, the Social Security Program with a fund allocation of IDR 490 trillion is not all aimed at poor people.
Coordinating Minister Muhadjir Effendy emphasized the importance of understanding this difference so that there are no misperceptions regarding the government’s efforts to reduce the poverty rate to 7.5 percent and the extreme poverty rate to zero percent this year. It is hoped that clear communication regarding the definition of Perlinsos and Bansos can avoid misunderstandings, especially in reporting the effectiveness of using large budgets for these programs. However, Perlinsos and Social Assistance can both maintain people’s purchasing power in the midst of global uncertainty that continues to this day.
Meanwhile, President Joko Widodo emphasized that the distribution of various social assistance to beneficiary communities is one of the government’s steps in mitigating the increase in food prices that has occurred in almost all countries. The social assistance that has been distributed to the community since September 2023 includes rice assistance and Direct Cash Assistance (BLT).
Rice assistance aims to help people face the increase in rice prices which is not only occurring in Indonesia, but also in other countries. Meanwhile, BLT is given to strengthen people’s purchasing power, especially for those who are less fortunate.
The distribution of social assistance is carried out through an approval mechanism in the House of Representatives (DPR) and is part of the State Revenue and Expenditure Budget (APBN). The President emphasized that the government cannot make decisions like this unilaterally, but rather through an approval process involving the legislative body.
President Jokowi explained that the El Nino climate phenomenon had caused a long drought which had an impact on rising food prices throughout the world. This adds to the urgency of the mitigation steps taken by the government.
These steps were taken within the framework of the government’s responsibility to protect people’s welfare, especially in facing economic challenges caused by external factors such as fluctuations in food prices due to climate change. And it is the government’s commitment to face the challenge of rising food prices by strengthening social protection.
It is hoped that the community will be helped in dealing with rising food prices which are not only a local problem, but also a global concern. The government is committed to continuing to take the necessary steps to maintain economic stability and community welfare amidst growing challenges.
