Bank Indonesia (BI) cut its benchmark interest rate, the seven-day reverse repo rate, by 25 basis points (bps) to 4.75 percent on Thursday after holding the rate in the last three months. BI Governor Perry Warjiyo said given the economic risks posed by the spread of COVID-19, there was a need to maintain economic growth.

Finance Minister Sri Mulyani Indrawati said Wednesday the government was planning fiscal stimulus through state budget disbursement into productive spending and early incentives to strengthen the domestic economy amid slowdown risks.

“The COVID-19 spread’s impact on the economy will be V-shaped and we forecast global economic growth to reach 3 percent in 2020 from our earlier projection of 3.1 percent,” Perry said, adding that global growth would pick up to 3.4 percent from BI’s earlier projection of 3.2 percent next year.

Read also: Bank Indonesia cuts rate, revises down growth target amid virus outbreak

BI also revised down Indonesia’s economic growth projection to between 5 and 5.4 percent this year from its earlier projection of between 5.1 and 5.5 percent. The growth would pick up to 5.2 to 5.6 percent in 2021.

“The monetary policy remains accommodative and consistent with the projected inflation rate and is a preemptive measure to maintain the momentum of domestic economic growth amid a stagnated global economic recovery caused by the coronavirus,” he added.

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