Illustrative image (Photo: VNA) Jakarta (VNA) - Indonesia’s new debt is expected to triple this year as the government struggles to fund its fight against the COVID-19 pandemic.
According to the newly enacted Presidential Regulation No. 54/2020 on the 2020 state budget revision issued on April 3, the Indonesian government has increased deficit spending to 1 quadrillion Rp (61.5 billion USD) this year, a jump of 286 percent from the initial target of 351.9 billion Rp.
The government plans to offer sovereign debt papers worth 549.6 trillion Rp, an increase from the initial 389.3 trillion Rp, while also planning to raise 450 trillion Rp in “pandemic bonds”.
Finance Minister Sri Mulyani Indrawati said on April 6 that the government would look for safe financing sources, including the option to use the endowment fund for education (LPDP) as well as accumulated cash surplus (SAL), but said that “would not be enough”.
President Joko Widodo has announced additional state spending worth 405.1 trillion Rp to finance Indonesia’s battle against the novel coronavirus SAS-CoV-2 pandemic. The new allocation will be used specifically for healthcare, social safety net and business recovery programmes.
The state budget revision now targets 1.76 quadrillion Rp in revenue, lower than the 2.23 quadrillion Rp previously set out in the 2020 budget.
Expenditure, meanwhile, jumps to 2.61 quadrillion Rp from the 2.54 quadrillion Rp targeted previously. The government has widened its state budget deficit beyond the previous 3-percent-of-GDP cap to around 5 percent this year, in line with a new government regulation in lieu of law (Perppu) to lift the legal limit./.
VNA
