The government is set to change the mechanism for several social safety net (SSN) programs because of the poor disbursement of aid.
According to national economic recovery task force chief Budi Gunadi Sadikin, the move is expected to boost the allocation of Rp 695.2 trillion (US$47 billion) in stimuli provided by the government and spur the country's economy.
"One of the mandates President Joko ['Jokowi'] Widodo gave us is to make sure the acceleration of [stimulus] disbursement, so we can push the economy, drive private spending and corporate investments until the end of the year," Budi said on Wednesday.
"When the task force was established 40 days ago, we realized that some of the [SSN] programs are not as good as we would like to be and we need to improve them.”
Two SSN programs will be adjusted because of their poor disbursement rate, namely BLT Dana Desa (village funds unconditional cash transfers) and loan relief for micro, small and medium enterprises (MSME).
According to Budi, out of the Rp 31.8 trillion budget for BLT Dana Desa, the government had disbursed only Rp 10 trillion or 30 percent of the funds.
"We realized that we need to modify our methods of distributing aid. Instead of giving the funds directly to low-income families who maybe already have access to other SSN programs, we could use the remaining funds for other programs as long as they are designated for villages," he said.
The loan relief and subsidy program for MSMEs also has a poor disbursement rate. Out of its Rp 35 trillion budget, only Rp 3 trillion or 7.20 percent has been distributed.
"Despite the low disbursement rate, however, the Rp 3 trillion has been given to 7.8 million SMEs. This made us realize that maybe the budget is a bit too aggressive. So, we will reallocate some of the remaining budget for other productive programs related to SMEs," Budi said.
The government still needs to disburse around Rp 218 trillion in stimuli until the end of the year and the task force has launched several new SSN programs to accelerate the disbursement.
The first is distributes initial working capital aid for SMEs (Banpres) called Produktif Usaha Mikro (BPUM), which is targeting 9 million to 12 million small businesses. The second is a wage subsidy program for some 15 million formal and informal workers affected by the COVID-19 pandemic.
"We're very happy to announce that we have distributed Rp 7 trillion or 31.79 percent of Rp 22 trillion in BPUM funds in just two weeks. We also disbursed Rp 3 trillion out of the Rp 37.8 trillion wage subsidy budget, or 7.9 percent, a week after the program launched," Budi said.