Indonesia pledges fresh wave of stimulus to counter virus impact

Finance Minister Sri Mulyani Indrawati says previous packages still being evaluated. (Twitter pic/SalaamGateway)

JAKARTA: Indonesia has pledged to boost stimulus efforts aimed at countering the coronavirus crisis by as much US$1.8 billion, Finance Minister Sri Mulyani Indrawati said, as the outlook for Southeast Asia’s biggest economy continues to deteriorate.

The economy is now expected to weaken further and grow between 4.5% and 4.7% in the first quarter, Indrawati said Wednesday.

That compares with an estimate of 4.7% two weeks ago and puts Indonesia on track for its weakest growth since 2009.

Indrawati announced a raft of new measures to support the economy, including re-allocating as much as 10 trillion rupiah from the state budget.

Another 17.2 trillion rupiah may be shifted from funds earmarked for regions to help combat the fallout stemming from the virus.

“We are still evaluating the previous packages,” Indrawati said at a news conference Wednesday. “We are assessing the scope, the target and mechanisms. But we are in a very flexible mode so we can react properly in case the situation changes very quickly.”

Revenue slump

The new measures come in the wake of two rounds of fiscal stimulus announced in recent weeks, including a 22.9 trillion rupiah package on March 13. Cases of Covid-19 have soared in Indonesia in recent days to 227 confirmed cases with 19 fatalities, prompting the government to step up containment and efforts to insulate the economy.

People in informal work are set to be given financial assistance, Indrawati said, without providing details.

The government will move to secure and distribute basic supplies in the event areas are locked down, she said.

The virus is weighing heavily on the global economy, and Indonesia has not escaped the carnage.

Tax revenue had fallen 0.5% to 152.9 trillion rupiah as of the end of February compared to a year earlier, data Wednesday showed. Oil and gas revenue plummeted 37% over the same period.

The assumptions underpinning the 2020 budget have changed as a result of the pandemic, Indrawati said.