Three Years of Living Dangerously With Indonesia’s Radical Experiment
Once subversive ideas are now ho-hum, with Jakarta signaling its emergency economic measures will be needed for a while yet.
The grave of a Covid-19 victim at the Rorotan cemetery in Jakarta, Indonesia.
Photographer: Dimas Ardian/BloombergOne of the nations most afflicted by Covid-19 and enjoying few of the spoils of the global economic rebound, Indonesia essentially declared the pandemic will last through 2022. The world’s fourth-most populous nation is keeping its finances on a wartime footing for an additional two years. For those looking to put a structure around the often-recited but still amorphous “new normal,” Indonesia offers one version.
Despite pledges a year ago that a radical financial experiment was a one-off, Finance Minister Sri Mulyani Indrawati said Monday that the central bank will again directly finance state spending. Not just in 2021, but through the end of next year. The step, which officials call “burden sharing” and is known more broadly as debt monetization, was framed as necessary given the prolonged health crisis. Under the program, Bank Indonesia will buy 215 trillion rupiah ($15 billion) of bonds from the government in private placements this year and 224 trillion rupiah next year. That follows the initial sum of nearly 400 trillion rupiah announced in 2020.