A street in Jakarta, Indonesia. (Photo: Xinhua/VNA)Jakarta (VNA) – The Indonesian government is rollingout a 641.17 trillion rupiah (43 billion USD) economic recovery stimulus,bigger than previous allocations, to soften the impact of COVID-19 on micro,small and medium enterprises (MSMEs), as well as state-owned enterprises(SOEs).
Finance Minister Sri Mulyani Indrawati said the “nationaleconomic recovery” programme will include a strengthened social welfare net, taxincentives, capital injections into SOEs and interest rate subsidies for MSMEs,among other measures.
The government will accelerate spending to help MSMEs andSOEs, apart from a consumer spending stimulus and tax incentives for industry,Sri Mulyani said during a press conference. These efforts aim to stimulate thesupply and demand for economic recovery, she noted.
The government will revise again the 2020 state budget toaccommodate the stimulus as it expects the budget deficit to further increaseto 6.27 percent of the country’s GDP, larger than the initial plan of a deficitamounting to 5.07 percent of GDP.
Sri Mulyani said the widening budget deficit was warrantedas government revenues may drop by 69.3 trillion rupiah to 1.69 quadrillionrupiah, while the government boosts state spending by 106 trillion rupiah to 2.72quadrillion rupiah.
State income will drop as a result of bigger tax incentivesand weakening economic sectors and commodity prices, the Finance Minister toldreporters. Meanwhile, state spending will be boosted to strengthen the economyagainst the COVID-19 pressures, she added.
Indonesia is planning a 149.29 trillion rupiah bailout for12 SOEs, mostly as cash compensation and working capital investments, to reducethe impact of the coronavirus crisis. The funding includes 48 trillion rupiahin compensation for electricity firm PLN, 45 trillion rupiah in compensation foroil company Pertamina and 8.5 trillion rupiah in working capital for flagcarrier Garuda Indonesia.
The country will also provide 34.15 trillion rupiah worth ofloan repayment subsidies for around 60 million borrowers to cope with thepandemic. A total of 87.59 trillion rupiah will also be allocated for banks tosupport their loan-restructuring programmes.
It is also planning to provide 172.1 trillion rupiah for thesocial welfare net, far higher than the previous plan of 110 trillion rupiah,as well as increasing its tax incentives program to 123 trillion rupiah fromthe initial plan of 70.1 trillion rupiah./.
VNA
