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View all search resultsJakarta, West Java to get $1.14b loan from govt to boost economy
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T
he government approved on Monday a Rp 16.5 trillion (US$1.14 billion) loan for the Jakarta and West Java administrations, the country’s top economic and industrial hubs, to revive economic activity during the coronavirus pandemic.
Jakarta will borrow Rp 4.5 trillion from the government this year and will borrow another Rp 8 trillion next year to pay for several infrastructure projects on waste management, drinking water management and flood control, among other projects.
West Java will borrow Rp 1.9 trillion from the government this year and another Rp 2.09 trillion next year to pay for various infrastructure projects, including hospital, road and housing projects.
“Both Jakarta and West Java contributed around 30 percent to Indonesia’s GDP. Therefore, this agreement will help support economic recovery efforts while also upholding COVID-19 health protocols,” Finance Minister Sri Mulyani Indrawati said on Monday.
Sri Mulyani said the funds were raised by sovereign debt papers (SBNs) bought by the central bank, which will allow for low debt costs for the regional administrations.
Government-owned infrastructure financing firm PT Sarana Multi Infrastruktur (SMI) will act as a lender for the regional administrations.
While government spending accounts for less than 10 percent of Indonesia’s GDP, it has a multiplier effect on various components of the economy, such as household spending and investment, as social aid can boost purchasing power, while government spending on goods and services helps support demand for businesses.
