JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) has approved a US$500 million policy-based loan to support the government of Indonesia’ efforts to expand financial access among micro, small, and medium-sized enterprises (MSMEs) and marginalized groups such as women and youth.
“Financial inclusion will play an important role in Indonesia’ recovery from the COVID-19 pandemic. More equitable, efficient access to financial products and services will support government measures to mitigate the pandemic’s economic and social impacts, rebuild livelihoods, and prepare for future economic shocks,” said ADB financial sector specialist for Southeast Asia, Poornima Jayawardana, in an official statement released today.
The financial inclusion survey by the Indonesian National Council showed the percentage of Indonesian adults with a bank account rose from 35 percent in 2016 to 56 percent in 2018. Despite the progress, the country still lags behind neighbors such as Malaysia and Thailand.
He said, ADB’ program supports the government’ goal of increasing the number of Indonesians using financial products or services offered by formal financial institutions to 90 percent by 2022, up from 76 percent in 2019.
In March, ADB has announced their commitment to raising the loan budget to Indonesia from last year worth of $1.7 billion to $2.7 billion. The Fund also approved a further $2 million to help Asia Pacific’ developing countries to overcome COVID-19 and improve resilience to this and other communicable diseases.
This was conveyed by ADB’ president Masatsugu Asakawa in the meeting with President Joko Widodo. According to him, around $500 million will distributes for financial inclusion, another $500 million for competitiveness programs, and the rest to other projects. He also offered support for Indonesian development priorities, such as human capital, infrastructure connectivity and climate change.
On the coronavirus outbreak, the funds will be available for all ADB developing member countries in updating and implementing their pandemic response plans, including buying emergency supplies and equipment assessing health system and economic impacts to improve future resilience. Also coordinating better regionally to prevent, detect, and respond to animal and human disease outbreaks. The work will be conducted in close collaboration with the World Health Organization.
Earlier in February, ADB has provided $2 million in funds to strengthen the immediate response capacity in Cambodia, China, Laos, Myanmar, Thailand, and Viet Nam. Over the longer term, this can be scaled up to focus on supporting pandemic preparedness and building resilience.
ADB also provided a private sector loan of up to RMB130 million ($18.6 million) to Wuhan, China-based Jointown Pharmaceutical Group Co. Ltd., to enhance the distribution and supply of essential medicines and protective equipment.
Past epidemics have shown that impacts can rapidly extend to all areas of a country’ economy, triggering fiscal shocks with long-term negative consequences that threaten stability and economic growth. Countries and businesses that rely on tourism are particularly vulnerable. Trade and supply chains also suffer.
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