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Jakarta Post

$3.9 billion state spending reallocated for COVID-19 response: Sri Mulyani

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Fri, March 20, 2020   /   04:55 pm
$3.9 billion state spending reallocated for COVID-19 response: Sri Mulyani Finance Minister Sri Mulyani Indrawati (right) follows a working meeting with the House of Representatives Commission on Feb. 19. (Antara/Aditya Pradana Putra)

The government will reallocate Rp 62.3 trillion (US$3.9 billion) of state spending from the 2020 budget to tackle COVID-19, focusing on health care, the disbursement of social funds and financial incentives for enterprises.

The sum was a significant increase from previous estimates of Rp 27 trillion budget reallocation on top of the Rp 120 trillion allocation for stimulus packages as the government mulls over worst-case scenarios including the possibility of zero percent economic growth, ministers said.

“We identified around Rp 62.3 trillion of planned spending that can be re-allocated to priority areas put forward by the President. This includes funding for business trips, blocked funds and non-operational purchase of goods, among other items,” Finance Minister Sri Mulyani Indrawati told a teleconferenced media briefing on Friday.

“We will adjust the budget to the three priority areas, including the procurement of medical devices and hospital needs such as the preparation of Wisma Atlet [athletes’ village in Jakarta] and hospital construction in Galangan Island for COVID-19.”

Read also: Jokowi urges ministers to focus budget on health care, social aid, economic stimuli

Sri Mulyani referred to President Joko “Jokowi” Widodo’s directive for state spending to prioritize health care, disbursement of social funds and financial incentives for enterprises to cushion the negative economic impact of the novel coronavirus.

The government’s baseline scenario was for Indonesia’s gross domestic product (GDP) to grow above 4 percent this year, Sri Mulyani said. Meanwhile, under the assumption that the pandemic lasts for six months, global trade slumps by 30 percent and the country goes into lockdown, economic growth could fall to as low as zero to 2.5 percent, she added.

Sri Mulyani asked ministries to delay big-check spending to allow more room for fiscal intervention in light of uncertainties surrounding the pandemic this year. The Finance Ministry will move quickly to facilitate other ministries’ spending priorities, she added.

“This will provide us with fiscal space for health care and protect the public and businesspeople.”

Indonesia had 369 confirmed cases of COVID-19 and 32 deaths as of Friday. Globally, the pneumonia-like illness has infected over 240,000 people and claimed at least 10,000 lives.

The government has previously announced two rounds of stimulus packages including a package worth Rp 22.9 trillion, which includes individual and corporate tax breaks. The first package, worth Rp 10.3 trillion announced on Feb. 25, provides staple needs and mortgage subsidies for low-income families and fiscal incentives for travel-related businesses.

Highlights of state spending reallocation announced Friday:

  1. Incentives worth Rp 3.9 trillion for tourism as a part of the first stimulus package will be adjusted by the government to respond to the fast-changing pandemic conditions.
  2. The government will increase the number of those receiving the Family Hope program (PKH) from 10 million families to 15 million families with the same benefits, aiming to provide a social safety net for up to 70 million individuals.
  3. A total of Rp 10 trillion funds for the newly launched pre-employment card program.
  4. Health care will receive additional Rp 6.1 trillion for insurance and compensation for medical workers including doctors and nurses.
  5. The government has pledged to evaluate Rp 3.3 trillion requested by National Disaster Mitigation Agency (BNPB) to step up fight against the pandemic.
  6. The government will redesign the disbursement of Rp 72 trillion in village funds this year.