Chapter 403 Hitchhiking

  After the IMF reached a preliminary agreement with Indonesia, Ha Xuming's team immediately moved to Jakarta to start their "guiding" work on Indonesia's fiscal and monetary policies.

"The salary will be reduced by at least 20% for each person, the financial subsidy will be reduced by at least 30%, and the fiscal deficit will be controlled within the range of 70% last year?" In the large welcome car, Susilo hastily flipped through the proposal implementation document in his hand, His brows were quickly furrowed. After a rough look, Susilo asked Ha Xuming, who was sitting in the tail seat of the car, facing him, "Do you know that if you do this, it may cause the entire Indonesian government system to rebound?"

  Although the country’s economy is in dire straits, the attitude of the Indonesian government has not changed in the slightest. When they arrived at the airport to greet Ha Xuming’s team, they were several super luxurious Mercedes-Benz business cars, all of which were the latest models. What greeted Ha Xuming himself was an extended Bentley modified car. The compartment behind the driver's cab was completely a small hotel. In addition to the soft and comfortable sofa back chairs, there was also a small bar installed. Refrigerators and other items are also available. At the end of the carriage, there is also a 17-inch satellite TV, which can receive channels from all over the world through satellite signals at any time.

"This is not my concern!" Ha Xuming took out a bottle of pure water from the refrigerator, unscrewed it and replied lightly, "My duty is to help the Indonesian government get out of the current predicament as soon as possible. In addition to restrictions, other aspects including monetary policy and transfer payments must also be taken. This is a series of supporting plans. As for the possible impact, of course, it must be resolved by the current Indonesian government.”

  Ha Xuming is 46 years old this year. He is in the prime of life. He flew from Washington to Jakarta for more than ten hours without jet lag. He and his team immediately put into work. He is not tall, about 1.78 meters, and his face is slightly round. Since he is well maintained, it is difficult to see his true age from his face. He has a big forehead, but his hair is a little sparse, and his facial features are not distinctive, it can only be said that he is square and square. To talk about something slightly distinctive, there are only black-rimmed glasses on the bridge of his nose all the year round, which add a bit of elegance to him.

   When answering Susilo's question, Ha Xuming did not raise his head, and was still looking at the latest information on the Indonesian economy, which was brought by Susilo. Although the IMF has been tracking the Indonesian economy for a long time, its current role is to help the Indonesian government formulate policies, so it is necessary to prepare more materials.

   It's just that Susilo saw his attitude without raising his head in time, but it was another scene. Susilo thought to himself, this guy is a little too arrogant, right? Anyway, I am also a representative of Indonesia, why does this guy even talk like this?

"What if the government can't suppress it?" Susilo was dissatisfied and continued to ask, "If this is the case, your policy will not be implemented. By then, everything you have done will be gone. significance?"

This time Ha Xuming finally heard something was wrong. He helped his eyes on the bridge of his nose. He raised his head with a little confusion in his eyes. There is no salary after the reduction. This is not my alarmist talk. In fact, the Indonesian government’s fiscal deficit is too high, which has exceeded 110% of fiscal revenue. If it continues like this, it will only be a matter of bankruptcy sooner or later. Don’t you know this situation? ?”

  As soon as Susilo heard about the financial deficit, Susilo's face suddenly became a little uncomfortable. He turned his head slightly to avoid the other party's direct gaze. As a senior employee of Bank Indonesia, how could he not know how dangerous the government's fiscal deficit has reached?

   It should be noted that in a normal country, government revenue and expenditures are limited. Generally speaking, the main income of the government is taxation. As for the so-called dividends of state-owned enterprises and land transfers in some countries, they are purely deprivation under the guise of deception.

   It is precisely because the source of finance is taxation, so in many cases, reducing fiscal expenditures and stimulating the economy means tax cuts and tax refunds. However, the current bad economic environment means that the tax base is reduced, so even if the current tax rate is maintained, it means that fiscal revenue will be greatly reduced, not to mention tax refunds and tax cuts.

  The reduction of fiscal revenue means that the fiscal deficit will further expand if the fiscal expenditure does not change accordingly. Although there is government credit as a guarantee, no one is sure whether the government will default, and the credit rating of the Indonesian government has long been set at "junk". It is obviously impossible to raise funds through the issuance of national bonds.

   Open source is hopeless, so we can only hope to save money.

   Susilo is naturally very aware of this truth, but if he hopes that the Bank of Indonesia will implement it, the possibility of implementation is basically zero. However, this did not prevent him from questioning the IMF's approach. After being pointed out, he couldn't find an excuse to refute it for a long time.

"If you don't cut off the opening of the capital account, then the only way to implement market-based interest rates is feasible. I believe you know it." Although Susilo was silent, it was obvious that Ha Xuming did not intend to let him go, "because Indonesia and Foreign markets are more closely connected, so you must not close the capital market. But because the currency depreciates sharply, and the price of imported products rises correspondingly quickly, so in terms of interest rates, it is necessary to ensure that the real interest rate is lower than the inflation rate. High, so as to activate the financial system.”

"In addition to these, I also need to consider the liquidity of central bank bills. With these central bank bills, liquidity can be recovered in a timely manner, so that inflation will not deteriorate rapidly. However, the Ministry of Finance believes that they are not necessarily willing to issue more central bank bills. After all, these high-interest rate bills represent a further increase in their fiscal expenditure. So, you need to persuade them in this regard!"

Susilo nodded silently, but soon he thought of another question, "Since the liquidity is to be tightened, the above-mentioned financial cuts should not be enough to make up for the new expenditures on central bills. Mr. Special Envoy, you Is there no other way?"

   "You're right!" Ha Xuming's face immediately became serious, and after taking a sip of water, he said word by word, "I decided to raise Indonesia's electricity and oil prices, and reduce related financial subsidies."

   "What?" If Susilo was surprised by the previous fiscal cuts, then what Ha Xuming said now gave him a shock, an indescribable shock.

  Because Indonesia is a member of OPEC and a pure oil exporting country, it is extremely cheap in terms of residential oil and gas consumption, and the oil price is only 20% of that of the United States in the same period.

  Why does the government provide financial subsidies to oil and gas so generously? This is because the Indonesian government owns all oil and natural gas. Except for some resources that some superpowers and groups can divide, everything else belongs to the government. According to statistics, 40% of Indonesia's fiscal revenue comes from the export of oil and natural gas. Under such circumstances, it is inevitable for ordinary Indonesian citizens to enjoy low oil and gas prices.

  Although Suharto is a bastard, he is far from being a **** to the extent of a certain country in later generations!

The problem now is that the rise in international oil prices will not only fail to increase government revenue, but will also increase Indonesia’s fiscal deficit, because the fiscal expenditures caused by subsidizing domestic residents’ rising oil prices exceed the fiscal revenue brought about by rising oil prices, so even in the stage of rising oil prices , Indonesia's fiscal deficit will also grow rapidly.

The electricity price is because Indonesia’s electricity is not created by itself. It is also bought from overseas companies at a high price and sold to ordinary Indonesians at a lower price. The difference in the middle will be paid by the government’s finances. The principle of subsidies is basically the same as that of oil.

  These two transfer payments account for the bulk of the Indonesian government’s fiscal expenditures. On the contrary, those reductions in the number of civil servants, salaries, and reductions in the number and scale of public construction are only an insignificant part.

"If this is the case, I can be sure that the entire Indonesian society will be in turmoil!" Susilo muttered to himself after recovering from the shock, "This kind of free-riding behavior has been deeply rooted in the hearts of the people, and now Ending this behavior will definitely cause violent fluctuations in the short term."

"This is also not something I need to consider!" Ha Xuming said lightly, without the slightest fluctuation in the expression on his face, "But we can give priority to those groups that are most affected, such as low-income farmers and students. Using discount coupons or tiered prices to subsidize them to ensure that they will not be affected to the greatest extent is the limit we can do! As for other classes, it is time for them to stop free riding!"

Free riding, in economics, means that when public goods are consumed, due to the non-exclusive and non-competitive nature of public goods, public goods cannot determine market efficiency through the price mechanism, so such products can only be provided by the government. to pay the bill.

  It’s like Indonesia’s domestic oil industry. Due to the large amount of financial subsidies from the government, the market mechanism cannot determine the price of oil products. In this case, the policy of enjoying low oil prices is a free-riding behavior in a broad sense.

   "I know too!" Susilo smiled bitterly, trying to say something, but he opened his mouth, but couldn't say anything.

  On the one hand, there are possible social turmoil, and on the other hand, the serious illness that has to be treated with strong medicine. Susilo has no idea how to choose. In fact, even if he has an idea, it is not his turn to make the decision.

  After he figured it out, he could only let out a long sigh and didn't ask any more questions.

   Thanks to book friends lztjd, jjmm5200, Sudao Duanyou, wangxueliang, and brother Huan for voting monthly tickets! Thank you everyone~

  

  

  (end of this chapter)