Indonesian Government to Accelerate Stimulus Spending to Avoid Recession

JAKARTA, KOMPAS.com – Indonesia will accelerate economic stimulus spending to cushion the impact of the Covid-19 pandemic, said Coordinating Minister for Economic Affairs Airlangga Hartarto.

The government hoped this pump-priming measure could fuel domestic demand and spur economic activity. Investment is expected to recover in the second half of 2020 and help to avoid a recession.

“Several measures have been done to avoid the recession, extraordinary steps will be taken in the third and fourth quarters, government spending will be implemented on a large scale,” said Airlangga in a video conference July 27.

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The government has allocated 607.5 trillion rupiahs ($42 billion) for the national economic recovery program during the pandemic. Of this, 203.9 trillion rupiahs ($14 billion) will go to safety net programs, 120.6 trillion rupiahs ($8.3 billion) is allocated for business incentives, 123.46 trillion rupiahs ($8.5 billion) in incentives for micro, small, medium enterprises, and 53.57 trillion rupiahs ($3.6 billion) in corporations.

Airlangga said the government has also provided 106.11 trillion rupiahs ($7.3 billion) budget allocation for sectors and local administrations.

The senior minister explained that the implementation of the national economic recovery is carried out by placing government funds in banks, working capital loan guarantee, and state capital injections (PMN).

The government has recently provided funds for the Regional Development Banks (BPD) with a total amount of 11.5 trillion rupiahs ($793.5 million). Besides, the government has just disbursed loans of 16.5 trillion rupiahs ($1.1 billion) to the West Java and Jakarta administrations.

“This was because the locally generated income (PAD) of Jakarta and West Java fell 31.13 trillion rupiahs ($2.1 billion) and 4.21 trillion rupiahs ($290 million), respectively,” he said.

(Writer: Mutia Fauzia | Editor: Yoga Sukmana)

Source: https://money.kompas.com/read/2020/07/27/145712426/hindari-resesi-pemerintah-bakal-belanja-besar-besaran.