Disasters Pressure the Economy, Sweetened Beverage Excise Undecided: What is the Government's Next Move?

The Coordinating Minister for Economic Affairs stated that disasters occurring in several regions of Indonesia have the potential to suppress economic activity in the affected areas. The government is continuously monitoring the impact of these disasters on community activities as well as various government programs across several provinces. In addition to natural disasters, the government is also observing the impact of volcanic eruptions currently occurring at around five to six volcanoes, which have disrupted community activities in several regions.

The impact of the disasters is also beginning to be felt in the logistics sector, particularly in air transportation. Flight disruptions have the potential to affect goods distribution because the aviation sector plays a vital role in cargo transport. The government is still monitoring the duration of flight disruptions in the affected regions, as the length of flight access closures is one of the determining factors for the magnitude of the impact on economic activity and logistics distribution. Amidst this potential pressure, the government assesses that the economic impact of the disasters remains manageable, including through policy support and disaster management budgets.

The Minister of Finance acknowledged that the series of disasters, ranging from earthquakes and forest and land fires to volcanic eruptions, could impact economic growth. However, the Minister predicts that this impact will not cause economic growth to slow down significantly. He emphasized that the budget condition and national economic fundamentals remain within safe limits. The government also remains optimistic that the economic growth target will be maintained by boosting growth in the remainder of the third quarter through the fourth quarter of 2026.

On the budget side, the government has prepared disaster management funds through the National Disaster Management Agency (BNPB) and is ready to provide additional allocations if the handling needs exceed the available budget. The amount of the additional budget will be adjusted according to BNPB's needs and requests. The government has also prepared a budget of up to Rp5 trillion for disaster management as an emergency or on-call fund. In addition to ensuring fiscal capacity to respond to disasters, the government also needs to consider economic conditions when determining policies that affect state revenue. One of these considerations is reflected in the planned implementation of the excise tax on Packaged Sweetened Beverages (MBDK).

The Minister of Finance has not yet decided on the implementation of the Packaged Sweetened Beverages (MBDK) excise, even though the potential revenue from this policy has once again been included in the 2027 target. Purbaya stated that the decision to implement the MBDK excise will take into account future national economic conditions. According to him, implementing the excise when the economy is weakening has the potential to suppress economic growth because the government would likely need to provide subsidies and incentives once again to protect the economy. Conversely, once economic conditions are strong, the implementation of the excise tax can be considered.

The discourse on implementing the MBDK excise was previously pushed by the former Minister of Finance to be enacted starting in 2025, but was later postponed by the current Minister of Finance. The MBDK excise plan was also included in the 2025 Draft State Budget (RAPBN) Financial Note and is part of the state revenue optimization strategy. Thus, this series of policies indicates that the government needs to maintain a balance between efforts to sustain economic growth, providing fiscal space to face pressures such as disasters, and optimizing state revenue.

The government's series of policies shows that achieving economic growth remains a priority amidst various pressures, including the impact of disasters on economic activities and the budget required for their management. On the other hand, the government also needs to consider economic conditions when determining state revenue policies, including the planned implementation of the MBDK excise. For business actors and investors, these developments need to be monitored to anticipate changes in fiscal policy and keep business strategies adaptive. The government must maintain a balance between sustaining growth momentum, providing fiscal space to respond to economic pressures, and measurably optimizing state revenue.