62
E D I S I 0 2 T A H U N X V I I 2 0 1 1 IDR 721.5 billion for two program, i.e. revitalization and
rehabilitation of primary warehouse in the food production centers and national programs of community empowerment
Program Nasional Pemberdayaan Masyarakat or PNPM.
Table 3.1: Fiscal Stimulus Package
Source: 2009 Fiscal Stimulus Document, Ministry of Finance
IV. FISCAL STIMULUS EVALUATION
In order to evaluate Indonesia 2009 Fiscal Stimulus, four criteria are used: timing, target, implementation, and multiplier
effect.
4.1. Timing
Some literatures and previous researches state that timing is the most important factor for fiscal stimulus policy to be effective as a
countercyclical policy during the economic crisis. Fiscal stimulus should be given at the peak of the economic crisis, not after the
economy has started its recovery process. During the peak of the economic crisis, the economy is under its full capacity and need
stimulus to boost its growth. Often, the only source for stimulus is the government, acts as a trigger for the economic recovery.
However, the case is different when the economy has started its recovery process. When the recovery process began, the economic
activity has started improving. By adding additional stimulus, it will add unnecessary aggregate demand to the economy. The
result could be an overheating economy
Figure 4.1 shows Indonesia quarterly economic growth during the global financial crisis. Indonesia economic growth decrease
from 6.3 per cent at the 3
rd
quarter 2008 to 5.3 per cent at the 4
th
quarter 2008, 4.5 per cent at the 1
st
quarter 2009, and hit its low at 2
nd
quarter 2009, 4.1 per cent. Since the 3
rd
quarter of 2008 to the 2
nd
quarter of 2009, Indonesia economic growth shrunk 2.2 per cent. Looking at the figure, it can be assumed
that the crisis was peak at the end of 2008 up to the 2nd quarter of 2009. The economic growth has started recovering in the
3
rd
quarter of 2009, since there was a slight improvement of economic growth, from 4.1 per cent to 4.2 per cent. Looking at
the period of the crisis, the ideal time for the implementation of fiscal stimulus should be during 3
rd
quarter of 2008 to 2
nd
quarter of 2009.
Figure 4.1: Indonesia Quarterly Economic Growth
6,7 6,7
6,7 5,7
4,9 4,5
4,5 5,9
5,4 4,2
4,1 4,5
5,3 6,3
6,3 6,2
Peak of the GFC Ec
onom y star
ted rec
ov ering
3,5
0,1-0,8
GDP Growth GDP less Oil and Gas
0,2-0,8 0,3-0,8
0,4-0,8 0,1-0,9
0,2-0,9 0,3-0,9
0,4-0,9
4,0 4,5
5,0 5,5
6,0 6,5
7,0
Source: Central Bureau of Statisics
Indonesia fiscal stimulus package was agreed and signed by the legislative at the end of February of 2009. It was a little bit
late but still in range. Nevertheless, although the document has been signed at the end of February, there was a significant
lag between the moment the document was signed and actually being implemented. A clear prove can be seen in the
implementation of infrastructure stimulus. Figure 4.2 shows up till the 3
rd
quarter of 2009, the infrastructure projects practically have not been started. The infrastructure projects progress at
the end of 3
rd
quarter of 2009 was only 25 per cent and just started to significantly increase in the 4
th
quarter of 2009. Most of the infrastructure projects almost 40 per cent were done in
the last month of 2009.
Figure 4.2: Infrastructure Fiscal Stimulus Monthly Progress
0,00 0,06
Jun-09 Physical Progress
Budget Absorption 10
20 30
40 50
60 70
80 90
100
Jul-09 Agust-09
Sep-09 Okt-09
Nop-09 Des-09
4,51 4,83
13,93 14,72
27,79 24,95
42,1 47,45
62,85 94,73
93,61
57,45
Source: National Development Planning Agency, 2010
There is no information of monthly progress for other fiscal stimulus instrument. However the performance of
infrastructure stimulus, can give a picture concerning timing problem in the implementation of Indonesia fiscal stimulus.
Comparing figure 4.1 and 4.2, since the economy started its
63
E D I S I 0 2 T A H U N X V I I 2 0 1 1 recovery at the 3
rd
quarter of 2009 when the fiscal stimulus had not been fully implemented, we can speculate that the economy
started its recovery without much help from the fiscal stimulus. Worse, most of the stimulus poured into the economy at the 4
th
quarter of 2009 could give unnecessary additional demand to the economy which had started improving.
4.2. Target