The Jakarta Post
The Asian Infrastructure Investment Bank (AIIB), a China-backed multilateral development bank, is poised to allocate a total of US$1 billion in loans to help Indonesia in its COVID-19 response, according to the bank vice president.
The first disbursement of the loan will amount to $250 million, as part of the cofinancing program with the World Bank and Islamic Development Bank to provide a total of $750 million in loans.
The AIIB is also planning to offer another $750 million in loans for Indonesia to fund its economic relief and social safety net programs, as part of the cofinancing program with the Asian Development Bank (ADB), which is committed to providing $1.5 billion for the country.
Indonesia, which saw confirmed cases of COVID-19 surge to over 13,000 on Friday, requested the loan to finance its efforts to strengthen hospital readiness, pandemic preparedness and testing capacity.
“I hope that after COVID-19 is over, the economy will bounce back in most emerging countries,” AIIB vice president DJ Pandian told The Jakarta Post in a phone interview.
The AIIB expects the Indonesian economy to grow by less than 1 percent this year before recovering in 2021, compared with its initial projection of 6 percent annual growth for Southeast Asia’s largest economy.
The Indonesian government has allocated Rp 405 trillion ($27 billion) for its COVID-19 relief, of which the majority is intended as economic stimulus measures, and the rest for social safety net and health care.
“We expect next year it [the economy] will bounce back because of the proactive steps taken by the government of Indonesia to intervene to help the vulnerable groups and to inject liquidity into the market,” said Pandian.
The government is looking to borrow a total of $7 billion from multilateral organizations including the ADB, AIIB, World Bank and Japan International Cooperation Agency, said Finance Ministry Financing and Risk Management Director General Luky Alfirman.
“We are currently working out the details and we hope that we can get it by May or June,” Luky told reporters in a media briefing on Friday. “We will use the funds for budget financing.”
—Adrian Wail Akhlas contributed to this story