Finance Minister Sri Mulyani Indrawati at the 2020 State Budget meeting in Jakarta on Feb. 19. (Antara Photo/Puspa Perwitasari)

Gov't to Reallocate Up to $1.79b From State Budget for Covid-19 Relief

BY :NUR YASMIN

MARCH 18, 2020

Jakarta. Finance Minister Sri Mulyani Indrawati said on Wednesday the government will reallocate around Rp 5 trillion to Rp 10 trillion, or $325 million to $650 million, from the state budget for Covid-19 relief.

The government will start with halting non-urgent budget for ministerial travels, workshops, meetings, seminars and state events. 

The Finance Ministry will also set aside Rp 17.7 trillion from the Village Budget (Transfer ke Desa), which totaled Rp 27 trillion, for Covid-19 relief.

"The state budget's priorities right now are healthcare and social safety net, and to help the business and industry sectors," Sri Mulyani said in a virtual press conference on Wednesday.

The government is preparing a presidential decree to speed up the budget reallocation. The minister did not mention when it will be issued.

"A presidential decree will be issued for all ministries, agencies and regional governments to focus their budget on Covid-19 relief. Specifically, it will address ways to overcome the scarcity of medical equipment, including hand sanitizers, surgical masks and other personal protective equipment," Sri Mulyani said.

The government will also issue a new presidential decree to govern changes in the national health insurance BPJS, after the previous decree was rejected by the Supreme Court.

The adjustments will include BPJS coverage for Covid-19 patients.

"We will also ensure every health facility, including hospitals in regional areas, are well equipped to handle Covid-19 patients," the minister said.

Sri Mulyani said the sectors most affected by the Covid-19 outbreak in Indonesia are accommodation, transportation, retail and manufacture.

"We will prioritize the manufacturing of health products that are now in high demand, such as hand sanitizers and personal protective equipment," she said.

A sharp drop in tourist visits and trading has the potential to increase Indonesia's current account deficit this year, partially because Chinese tourists make up 13 percent of Indonesia's total international visitors.

Trade disruption with China has already affected the supply of non-oil and gas imports by 27 percent and Indonesia's export by 16 percent as of February.

Sri Mulyani said every time China's economic growth is reduced by one percent, Indonesia's would also be reduced by 0.3-0.6 percent.

She said the Organisation for Economic Co-operation and Development (OECD) has reduced this year's global economic growth projection from above 3 percent to 2.4 percent because of the Covid-19 pandemic that has now affected 150 countries.

"The OECD projected global economic growth might drop to 1 percent if this pandemic lasts longer than expected and affects more regions. This is a drastic reduction, the global economic performance would be at its weakest since the 2008 global financial crisis. But this will all depend on the length of the outbreak and how we manage this health crisis," Sri Mulyani said.

While many countries are starting to implement lockdowns to limit the spread of Covid-19, Indonesia has so far refrained from the drastic move

"Currently, the Financial Services Authority [OJK] is taking the same steps as other countries, which is relaxing fiscal and monetary policies," she said.

The government has previously launched phase I of its fiscal stimulus policy worth Rp 8.5 trillion and phase II to maintain people's consumption and business continuity from April to September.

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