The Jakarta Post
President Joko “Jokowi” Widodo has urged his ministers to focus the state budget on health care, social aid and economic stimuli to combat the impacts of the COVID-19 coronavirus pandemic.
Jokowi said the pandemic not only posed a huge risk to public health but also to the economy, with the global economic slowdown expected to hit the country going forward.
“I ask you [to focus the budget] on three things: health care to mitigate the COVID-19 risks, the social safety net through social aid and incentives for businesspeople and small and medium businesses,” Jokowi told ministers in his opening remarks of a teleconferenced limited Cabinet meeting Friday.
Indonesia had announced 309 confirmed COVID-19 cases and 25 deaths as of Thursday. Globally, the pneumonia-like illness has infected more than 244,000 people and claimed at least 10,000 lives.
Jokowi also called on ministers and regional administrations to delay non-prioritized spending. “I urge you to cut spending on business trips, spending on meetings and on purchases of goods that are not prioritized.”
“The public’s purchasing power must become our focus, particularly that of the low-income households,” he said, adding that the government would expand its social safety net program to boost consumption through the Family Hope Program (PKH), Indonesia Smart Cards (KIP) and the pre-employment card, among other things.
The government announced on Wednesday that it was finalizing a third stimulus package to reallocate Rp 27 trillion (US$1.8 billion) to fund the healthcare system. To fight the pandemic, it will also reallocate up to Rp 10 trillion that was intended for ministries and institutions as well as Rp 17.2 trillion earmarked for regional administrations.
“The third stimulus will prioritize health care, including hospital needs and medical devices, as well as the social safety net for those in need,” Finance Minister Sri Mulyani Indrawati said on Wednesday, adding that the government would also assess the best way to provide cash transfers for those affected by the pandemic.
The first stimulus package, worth Rp 10.3 trillion and announced on Feb. 25, provided staple needs and mortgage subsidies for low-income families, as well as fiscal incentives for travel-related industries. The second package, worth Rp 22.9 trillion, provided individual and corporate tax breaks and relaxed export and import procedures.
“We are still assessing the scope, mechanisms and the target for the third stimulus but we are very flexible, which allows us to react properly,” Sri Mulyani said.
She added that low-income households and individuals working in the informal sector would be given financial assistance, although she declined to provide further details.
Indonesia’s economic growth is projected to fall to around 4.5 to 4.9 percent in the first quarter and may plummet further in the second quarter as the pandemic strangles economic activity, the minister said.
Bank Indonesia (BI) also lowered on Thursday its economic growth projection to between 4.2 and 4.6 percent this year, the slowest since 2005, from last month’s expectation of between 5 and 5.4 percent.