JAKARTA: Indonesias US$24.2 billion healthcare budget and economic stimulus package may not be enough to weather the impact of COVID-19 and prevent millions from losing their jobs, analysts warned on Thursday (Apr 2).
They also told CNA that it is more important for the government to focus on containing the pandemic.
Advertisement
Advertisement
President Joko Widodo on Tuesday announced a number of measures to dampen the economic impact of the pandemic, which included cutting down corporate tax, removing the budget deficit cap and introducing incentives and cash aids to millions of Indonesians.
The president also announced that 75 trillion rupiah (US$4.5 billion) of the 405 trillion rupiah would be set aside for COVID-19 and used for healthcare, while the rest would fund social protection and economic stimulus programmes.
A woman wearing a protective face mask stands on the sidewalk amid the spread of coronavirus disease (COVID-19) in Jakarta, Indonesia, March 19, 2020. REUTERS/Willy Kurniawan
Mr Bhima Yudhistira of the Institute for Development of Economics and Finance, opined that containing the outbreak as well as addressing its economic impact are equally important and should be done simultaneously.
Advertisement
Advertisement
“But if the government wants to do both, 405 trillion rupiah is not enough. Many sectors have been greatly impacted by the outbreak, particularly informal workers and small businesses,” Mr Yudhistira told CNA.
Economist Sutrisno Iwantono said the stimulus package should focus on stopping the spread of the deadly disease.
“We should put all of our resources to address the root cause of the problem, COVID-19. Other expenditures can be done later,” Mr Iwantono told CNA.
“Its like the village is on fire and instead of putting out the fire and stopping it from spreading further, we are cleaning up the rubble first.”
Mr Didik Rachbini of the Institute for Development of Economics and Finance echoed the sentiment, telling CNA that getting the outbreak under control should be Indonesias first priority.
“Successful containment of the outbreak is key for Indonesias economic recovery as is the case for any other country,” he said.
“If the virus goes out of control, our healthcare system will be overwhelmed and we will spend more money to treat people,” the senior economist said.
READ: Malaysias latest stimulus package provides huge relief but is only enough until May, a commentary
"Thats why (the president) must not hesitate in taking the necessary steps to fight the pandemic, including imposing tough measures to stop people from travelling or mingling, and allocating more money to our healthcare system,” Mr Rachbini added.
An elderly woman sleeps at a bench in a shopping mall after Indonesia's capital begins a two-week emergency period to prevent the spread of coronavirus disease (COVID-19) in Jakarta, Indonesia March 27, 2020. REUTERS/Ajeng Dinar Ulfiana
ECONOMIC GROWTH TARGET SLASHED
Finance Minister Sri Mulyani Indrawati told reporters on Wednesday that the economy is now projected to grow 2.3 per cent this year, revised from the initial estimate of 5.7 per cent. Under a worst-case scenario, the countrys economy could even shrink by 0.4 per cent.
The economic slowdown and the overwhelming number of confirmed COVID-19 cases and deaths have weakened the Indonesian rupiah which has tumbled by almost 13 per cent in the last one month.
Mdm Indrawati said the rupiah may plunge to as low as 17,500 per US dollar or even to 20,000 per dollar under the worst-case scenario.
As of Thursday, nearly 1,800 people have tested positive for the disease while the death toll stood at 170.
READ: Three overlooked facts behind Indonesias high COVID-19 death rate, a commentary
Indonesia is also removing the budget deficit cap which was earlier set at 3 per cent of Indonesias GDP. The budget deficit is expected to rise to at least 5.07 per cent of GDP from the original target of 1.76 percent.
The removal of the budget deficit cap provides room for Indonesia to earmark more money to fight the pandemic.
Mr Widodo had on Tuesday enacted a government regulation on the so-called “Large Scale Social Restrictions” which allows cities and provinces to close non-essential services and restrict peoples movements.
The president also announced a number of measures to mitigate the economic impact of the restrictions, including incentives and cash handouts for 20 million underprivileged Indonesians as well as benefits for 5.6 million informal workers who stand to lose their livelihoods once the restrictions are fully implemented.
FILE PHOTO – A view of almost empty main road amid the spread of coronavirus disease (COVID-19) in Jakarta, Indonesia, March 31, 2020. REUTERS/Willy Kurniawan
“The government wants to avoid panic buying and unrest by having the stimulus and economic measures ready before the large scale social restriRead More – Source
[contf]
[contfnew]
channel news asia
[contfnewc]
[contfnewc]
