East Asia Bond Market: Expands But Concerns Persist
The Asian Development Bank approved US$1.5 billion in financing to support Indonesia’ efforts to alleviate the impact of the COVID-19 pandemic - Photo by ADB Office

JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) approved US$1.5 billion in financing to support Indonesia’ efforts to alleviate the impact of the COVID-19 pandemic on public health, livelihoods, and the economy, said the lender today (04/23).

“The quick-disbursing financing is part of a larger support package ADB will provide to help Indonesia respond to COVID-19, in close coordination with other development partners,” ADB President Masatsugu Asakawa said in an official statement.

Indonesia’ minister of finance, Sri Mulyani Indrawati commented, that ADB’ support will help the government to mitigate the devastating impact of COVID-19. As known, the country has widened 2020 State Budget deficit to curb the Southeast Asia biggest economy from the epidemic.

To finances the deficit with total amount Rp852.9 trillion (US$55.03 billion) or 5.07 percent of total gross domestic products (GDP). And the deficit may widen slightly, by another Rp12.2 trillion, if Indonesian crude price averages $30.90 a barrel.

Around Rp400 trillion will use to tackle the COVID-19 impact to the society through various schemes has been prepared by the government.

Indonesia has been severely affected by the pandemic. Critical public health measures to limit the spread of the disease have seriously disrupted economic activity, resulting in a sharp decline in forecasts for economic growth in 2020.

Many Indonesians have been adversely affected by the economic downturn, especially the poor and vulnerable groups. ADB estimates that poverty could increase significantly, unless support measures can be effectively implemented.

In April 13, ADB has tripled the size of its response to the COVID-19 pandemic to $20 billion and approved measures to streamline its operations for quicker and more flexible delivery of assistance.

The package expands ADB’ $6.5 billion initial response announced on 18 March, adding $13.5 billion in resources to help the developing member countries counter the severe macroeconomic and health impacts caused by the virus. The $20 billion package includes about $2.5 billion in concessional and grant resources.

“This pandemic threatens to severely set back economic, social, and development gains in Asia and the Pacific, reverse progress on poverty reduction, and throw economies into recession,” said Asakawa.

The Fund’ most recent assessment, estimates the global impact of the pandemic at between 2.3 percent and 4.8 percent of GDP. Regional growth is forecast to decline from 5.2 percent last year to 2.2 percent in 2020.

The new package includes the establishment of a COVID-19 Pandemic Response Option under ADB’ Countercyclical Support Facility. Up to $13 billion will be provided through this new option to help member countries implement effective countercyclical expenditure programs to mitigate impacts of epidemic, with a particular focus on the poor and the vulnerable.

Some $2 billion from the $20 billion package will be made available for the private sector. Loans and guarantees will be provided to financial institutions to rejuvenate trade and supply chains.

Enhanced micro-finance loan and guarantee support and a facility to help liquidity-starved small and medium-sized enterprises, including those run by female entrepreneurs, will be implemented alongside direct financing of companies responding to, or impacted by the COVID-19.

The response package includes a number of adjustments to policies and business processes that will allow ADB to respond more rapidly and flexibly to the crisis. These include measures to streamline internal business processes, widen the eligibility and scope of various support facilities, and make the terms and conditions of lending more tailored.

US$1: Rp15,500

Written by Staff Editor, Email: theinsiderstories@gmail.com