The government will allocate 405.1 trillion rupiah ($24.8 billion) to fight the pandemic, pushing the budget deficit to 5.07% of gross domestic product this year, President
The budget deficit cap of 3% of GDP, introduced in 2003 in the wake of the Asian financial crisis, will be removed immediately. With no debt ceiling in place, the government can significantly ramp up stimulus to support the economy. The government will revert to the 3% cap in 2023.
The measures provide “a foundation for the government, the banking and financial authorities to take extraordinary steps in ensuring public health, saving the national economy and financial system stability,” said Jokowi, as the president is commonly known.
Like many other countries, Indonesia is confronting a crisis on two fronts, with a spike in Covid-19 virus cases stretching the health system to near-breaking point and the economy rapidly deteriorating. The emergency decree underscores the extent of concern for Southeast Asia’s biggest economy, with the government noting that “casualties and material losses are getting bigger.”
There are also worries of widespread job losses in the nation of 270 million people, where about 70 million are in informal employment, as officials warn economic
“The stimulus must be directed more to the middle- and low-income households to sustain the economy and stop it from slipping deeper,” said
Tuesday’s steps follow
“Finally we are getting some sizable fiscal support measures after the two packages which we thought were small,” said
The government will expand social assistance programs to cover a total of 10 million families, and loan repayment terms will be eased for small-business owners and low-income borrowers, Jokowi said.
The president declared a national
Indonesia also banned foreigners from visiting or transiting through the country, while augmenting screening of citizens returning from overseas. The virus has infected more than 1,500 people in Indonesia and killed 136, the most in Southeast Asia.
The increased fiscal stimulus comes as the central bank continues its currency and bond-market intervention in response to the crisis, after cutting its benchmark interest rate for a second straight month in February. The bank has purchased 172.5 trillion rupiah of government bonds so far this year, Governor
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