JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) has approved a US$500 million loans for Indonesia to boost an emergency financing caused by natural hazards and disease outbreaks. The Fund has committed $11.2 billion in grants, technical assistance, loans, and private sector assistance to help its developing members to address the devastating impacts of the pandemic.
“Indonesia is located in the Pacific Ring of Fire and is highly vulnerable to a range of natural hazards including earthquakes, tsunamis, volcanic eruptions, landslides, floods, and droughts, and now COVID-19,” said ADB vice president, Ahmed M. Saeed in an official statement released two days ago.
The Disaster Resilience Improvement Program, which offers contingent disaster financing following disaster or health emergency declarations, supports Indonesia’ reforms in disaster risk management and health services, as well as efforts to improve disaster resilience among the country’ institutions and communities.
“The program aims to help the government boost environmental sustainability, disaster and climate resilience, and human capital development, including health and gender equality,” added by financial sector specialist, Benita Ainabe.
The funds, she said, will help the government develop recovery and reconstruction plans with greater certainty, reduce infrastructure damage, and prevent the loss of life in future disasters. The program will focus on three key reform areas such as strengthening government policies and action plans that respond to disasters and health-related emergencies, including social protection.
Then, increasing the resilience of public infrastructure to disaster and climate risks and thereby reducing replacement or restoration costs, increasing financing for disaster risk and pandemic response through insurance, improved health care, and targeted social spending.
The program reflects the priority of addressing climate change and disaster risk mitigation in ADB’ new 2020 – 2024 country partnership strategy for Indonesia. It will complement the Fund’ $1.5 billion COVID-19 Active Response and Expenditure Support Program for Indonesia, which is supporting the government’ response to the pandemic.
In April, the multilateral agency has approved US$1.5 billion in financing to support Indonesia’ efforts to alleviate the impact of the pandemic on public health, livelihoods, and the economy.
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.
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 the Fund’ $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 ADB President Masatsugu 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.
ADB has also provided a $3 million grant under the Asia Pacific Disaster Response Fund to help the government procure critical medical equipment and supplies.
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