Government’s Fiscal Policy Puts Emphasis on Combating Extreme Poverty

World Bank Raises Extreme Poverty Line to $2.15 per Day, Indonesia Disadvantaged? (photo: Dulana Kodithuwakku - Unsplash)

The government’s unwavering commitment to eradicating extreme poverty has become a key focus of its fiscal policy, as it strives to foster an inclusive and sustainable economic transformation.

Recent data compiled by the government sheds light on the scale of extreme poverty nationwide, revealing that approximately 5.59 million individuals, accounting for 2.04 percent of the population, were classified as living in extreme poverty as of March 2022. Looking ahead to 2024, the government has set an ambitious target of reducing extreme poverty to a remarkable 0 percent.

However, the path to achieving this target is riddled with challenges. Detailed within the Macro Economic Framework and Fiscal Policy Highlights (MEF and FPH) for 2024, it is evident that there are still 14 provinces grappling with an increase in the number of individuals facing extreme poverty in 2022.

These provinces experiencing an unfortunate upsurge in extreme poverty include North Sumatra, Riau, South Sumatra, Bangka Belitung, DKI Jakarta, West Java, Bali, West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, Central Kalimantan, South Kalimantan, West Sulawesi, and Papua.

Undeniably, the plight of extreme poverty is most acute in the provinces of Papua and West Papua, where the rates of extreme poverty stand at a distressing 10.92 percent and 8.35 percent, respectively.

Highlighting the pressing need for comprehensive basic services, it is disconcerting to learn that 20.4 percent of impoverished households lack access to safe drinking water, 39.5 percent lack proper sanitation facilities, and a staggering 40.5 percent of the poverty-stricken population remains without adequate healthcare coverage.

Moreover, the distribution of assistance to those in extreme poor has yet to be fine-tuned, as the Ministry of Finance elucidates, “Less than 20 percent of impoverished households receive direct cash assistance [BLT] from the village. On the other hand, there are instances where non-poor households receive BLT.”

To counteract this alarming situation, the government has formulated a comprehensive set of strategies aimed at eliminating extreme poverty by 2024. These strategies encompass reducing the financial burden on the extreme poor, augmenting the income of impoverished individuals, and eradicating pockets of poverty that persist within communities.

In alignment with the broader objective of poverty reduction, the government has set its sights on lowering the overall rate to a range of 6.5 to 7.5 percent by 2024.

Acknowledging the magnitude of the challenge at hand, Yusuf Rendy Manilet, an esteemed economist from the Center of Reform on Economics (CORE) Indonesia, asserts that the government’s ongoing efforts to alleviate poverty face substantial hurdles, particularly against the backdrop of projected economic growth for the forthcoming year.

As the government endeavors to achieve an economic growth rate of 5.3 to 5.7 percent in 2024, historical patterns indicate that adjustments may be necessary, especially given the prevailing global uncertainties and the intricate interplay between political dynamics and economic progress.