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View all search resultsGovt to expand social aid, incentives to boost spending
Finance Minister Sri Mulyani Indrawati said on Wednesday the government would reallocate around Rp 70.8 trillion (US$4.85 billion) from existing ineffective stimulus packages to fund the social aid expansion and new incentives.
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T
he government is planning to expand its social aid program and incentives for micro, small and medium enterprises (MSMEs) in an effort to boost consumer spending and revive the sluggish economy in the second half of this year, as fears of a recession loom.
Finance Minister Sri Mulyani Indrawati said on Wednesday the government would reallocate around Rp 70.8 trillion (US$4.85 billion) from existing ineffective stimulus packages to fund the social aid expansion and new incentives so that the government would not need to increase its COVID-19 response budget, already worth Rp 695.2 trillion.
“This will include extending the social aid program period to December to cushion the impact of the COVID-19 pandemic,” she said during a livestreamed press conference.
Indonesia’s gross domestic product (GDP) shrunk 5.32 percent year-on-year (yoy) in the second quarter as all components except for net exports fell annually as a result of the pandemic.
Consumer spending, which accounts for more than half of GDP, fell 5.51 percent yoy in the second quarter, while investment, the second-largest contributor, contracted 8.61 percent.
Sri Mulyani expects the economy to grow at no more than 0.5 percent, or even contract further, in the third quarter, which would mean a recession for Indonesia, while fourth-quarter GDP growth is projected to be near 3 percent, making for a full-year expansion of zero to 1 percent.
Under the plan, the government will allocate Rp 4.6 trillion to increase the amount of rice for the 10 million recipients of the Family Hope Program (PKH) to 15 kilograms per month. It would also disburse Rp 500,000 to 10 million Staple Food Card recipients this month.
