The government has discussed and submitted the Bill on the 2021 APBN and Financial Note with the House of Representatives. This time, the 2021 RAPBN was prepared in conditions of the global and national economy which is under high pressure and uncertainty due to the COVID-19 pandemic. In the 2021 macroeconomic framework, the government is developing a fiscal policy strategy aimed at:

1. Accelerate post-pandemic economic recovery
2. Strengthening reforms to strengthen productivity, innovation and competitiveness
3. Accelerate digital economic transformation
4. Anticipate and take advantage of demographic changes

The prospects for the national economy in 2021 are expected to improve in line with projections for global economic recovery and the impact of fiscal support on accelerating economic recovery, including support for controlling the pandemic. However, the 2021 macroeconomic framework is prepared with a high risk of uncertainty, so there is a possibility of divergence in global economic projections in 2020 and 2021.

The government is targeting economic growth of between 4.5%-5.5% in 2021 with a state revenue target of IDR 1,770 trillion. Meanwhile, the projected state budget in the 2021 RAPBN is estimated to reach IDR 2,747.5 trillion or 15.6 percent of GDP. Compared to the 2020 deficit of IDR 1,039 trillion (6.2%), the 2021 RAPBN budget deficit is smaller with a projection of IDR 971.2 trillion or 5.5% of GDP.

The spike in the 2020 APBN deficit of 6.2% of GDP has clearly sparked doubts, especially among foreign investors, regarding its financing. sustainable. However, the government and BI have worked together on the scheme one-off burden sharing, where BI will purchase and bear the interest burden for new SBN worth IDR 397.6 trillion for public good spending. Apart from that, BI will also "subsidize" the interest on new SBN worth IDR 176.8 trillion which will be issued through an open offer on the market. This policy is expected to balance the market's absorption capacity for SBN, stability of the Rupiah, and fiscal space for more productive spending.

Now the JCI has gone through a phase panic selling accompanied by opportunities for strengthening due to social assistance and economic stimulus which boost people's purchasing power amidst uncertainty. For this reason, STAR AM still maintains preferred shares and suggests being neutral towards the market.

Author: Agus Pramono, CFA