The Role of Indonesian Social Protection in Combating the Economic Crisis Caused by Covid-19
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Monday (17/07), the 14th session of the Global Summer Week 2023 featured Dr. Elan Satriawan, a lecturer from the Department of Economics at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM). During this session, Dr. Elan presented material related to social protection as a shield against the systemic impacts of the Covid-19 pandemic. The pandemic has caused an economic crisis worldwide, Indonesia being no exception. However, Indonesia has shown resilience in the face of the situation.
It is important to note that Indonesia's development has faced various challenges during the pandemic. Dr. Elan explained that besides the recession, the economy in this country has also been less inclusive. Economic growth has only benefited a few groups, indicating economic inequality. The pandemic has also caused an escalation in the poverty rate in Indonesia, leading to widespread effects such as increased malnutrition cases and a decline in human capital quality.
Next, Dr. Elan emphasized the urgency of fiscal policies to respond to the pandemic-induced crisis. Vito Tanzi, former Director of Fiscal Affairs Department at the International Monetary Fund (IMF), defines fiscal policy as the use of financial instruments to influence economic conditions and achieve welfare. Such policies may include the provision of public goods, income redistribution, and economic stabilization and stimulation.
In responding to the crisis, Dr. Elan mentioned that fiscal policies can be implemented in various ways, such as improving the quality of healthcare and education services, along with reducing economic inequalities. In Indonesia, the government has employed fiscal policies to respond to the crisis caused by the Covid-19 pandemic. The government implemented various forms of social protection during that time, with "Bantuan Langsung Tunai" (translated as Direct Cash Transfer in English) as one of the examples.
These programs have proven effective in reducing unemployment and poverty rates in Indonesia. Since 2021, Indonesia's economy has rebounded and shown robust growth. Social protection programs have benefited the poor and vulnerable populations, making economic growth more inclusive. Therefore, social protection, as a form of fiscal policy, has become one of the keys to this country's resilience in facing the crisis.
Reportage: Rizal Farizi