Automatic Adjustment: Indonesia's Continuous Austerity Measures

Director General of the State Budget at the Ministry of Finance Isa Rachmatawarta acknowledged that the government has started to apply austerity measures in the form of automatic adjustments. One of the consequences is the blocking of the budgets of ministries and state institutions. This is a form of anticipation of the threat of a global crisis this year.

However, Isa Rachmatawarta argued that the automatic adjustment is not a budget cut or refocusing as has happened in 2020 and 2021. "We won't cut the budget, the budget will remain in the accounts of the respective ministries and state institutions. We just freeze it," he said in a meeting with the House of Representatives (DPR) Finance Commission, Wednesday.

The austerity measures were revealed in that meeting. The Minister of Finance Sri Mulyani Indrawati has evidently issued letter number S-1040/MK.02/2022 at the end of last year on the automatic adjustment of spending by ministries/institutions for 2023 of Rp 50.2 trillion. The DPR questioned why there was such an austerity action early this year.