Fiscal Space for Health in Indonesia: Public Sector Opportunities and Constraints in Achieving the Goals of Indonesia’s Mid-Term Development Plan

The health sector targets within the Government of Indonesia’s Mid-Term Development Plan (RPJMN) were recently costed as part of a collaboration between the Ministry of Planning (Bappenas) and HP+. The resources required over 2020–2024 represent a significant increase, needed to finance ambitious targets to raise the coverage and quality of essential healthcare services. The RPJMN also intends to increase the membership of the national health insurance scheme (JKN). In this report, Bappenas and HP+ partnered to analyze the budgetary space available at national and subnational levels and the possibility of greater earmarking of excise taxes on tobacco (beginning from the level enabled under existing laws) and sugary beverages (proposed) to finance RPJMN goals. Scenarios of expansion in JKN were considered, and the resources needed to subsidize higher membership from the informal sector were costed. Given the impact of COVID-19 on government revenue-raising capability in the 2020–2021 period, the report incorporates projections of recovery and trends in fiscal transfers between levels in Indonesia’s decentralized system. The report concludes that both national and subnational levels of government will need to prioritize health more in budgetary allocations to expand primary healthcare coverage and quality and to support a subsidized expansion of JKN membership. If available fiscal space within tobacco and sugary beverage taxation and more flexible fiscal transfers at the subnational level are tapped, then Indonesia can finance its RPJMN health sector goals

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