Indonesian government is considering to release a recovery bond to cover the financing of COVID-19 countermeasures, said the government official today (03/26) - Photo by the CMEA Office

JAKARTA (TheInsiderStories) – Indonesian government is considering to release a recovery bond in Rupiah denomination to cover the financing of COVID-19 countermeasures, said the government official today (03/26). The government regulation in lieu of law which became the legal basis for the issuance of the new government bond.

Secretary of the coordinating minister for economic affairs, Susiwijono through video conference said, the recovery bond will be bought by Bank Indonesia (BI) or other parties such as exporters. To smooth the plans, the government needs to issue the lieu of law.

The funds collected through the recovery bonds will be collected by the government and channeled to the business world in the form of special loans that will be designed as light as possible for the business world.

“We are exploring to issue a new form of debt or bond. We are preparing something like a recovery bond in the form of Rupiah that will be purchased by Bank Indonesia or a private sector that is capable of such as exporters and others,” he asserted.

The funds from the the bond issuances will later distributed to the entire business world through a special credit to revive their businesses, like the possibility of layoffs. Susiwijono stated, “We are targeting finance ministry will completed the regulation on Friday.”

Previously, the minister of finance, Sri Mulyani Indrawati revealed, her office was considering meeting budget financing needs with a non-conventional method that required a new legal foundation. The government has announced to expand the 2020 state budget deficit above 3 percent of gross domestic product (GDP) to meet the needs of handling COVID-19.

She added, President Joko Widodo has communicated with House of Representative and Auditor Board about the plans. To run the program, she continued, the government needs legal basis like regulations in lieu of laws or other rules.

“The 2020 state budget will surely undergo a major change, especially macro assumption. What we discussed with the council was to prepare rules in situations of urgency. That is why the government can propose regulations to replace the 2020 State Budget law,” she told reporters through video conference.

Right now, said Indrawati, her staff is identifying and try to respond the people, business world, and regional government needs to cover the COVID-19 impact but still inline with legal corridors. The proposals will later be decided by the president before hand it offer to parliament.

In the official statement released on March 23, chairman of budget committee at the Indonesian parliament, M. Said Abdullah stated, the government needs to immediately revises Law Number 17 of 2003 concerning on State Finance to provide a relaxed budget deficit from 3 to 5 percent and a fixed tax to the GDP ratio of 60 percent.

The regulations in lieu is needed by the government to readjust the existing bill. He also proposed, the government regulating the 2020 State Budget law and individual and corporate income tax act to accommodates the government needs to run the economic stimulus during the pandemic.

“The next goal is to ensure the implementation of the Social Savety Net program to help people’ lives,” he wrote by adding the third objective is to support the Micro, Small and Medium Enterprises and informal sectors to be able to survive facing difficult economic conditions.

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