JAKARTA (TheInsiderStories) – Indonesia’ House of Representatives approved the Government Regulation Lieu of Law Number 1 of 2020 concerning State Financial Policies and Financial System Stability for COVID-19 Handling become a law on Tuesday (05/12). With the approval, President Joko Widodo’ administration allows to set a deficit ceiling over than 3 percent of gross domestic products (GDP) and room for more spending and stimulus until 2022.
In addition, the government also allowed to spend Rp405.1 trillion (US$27.01 billion) to tackle the epidemic and its impact on the economy in this year. Minister of finance, Sri Mulyani Indrawati emphasized, the decision give a strong legal basis for the government and related institutions to continue steps in order to overcome the threat of COVID-19 in the field of health, social threats, economic threats and financial system stability.
She said that through the new bill, the government will distributes additional budget Rp75 trillion for health sector, including incentives for medical doctors, nurses, death benefits, purchasing medical devices (including Personal Protective Equipment), masks, hand sanitizers, ventilators, and hospital preparations and quarantine facilities.
The government also extended the provision of additional social assistance of Rp100 trillion to the people affected by COVID-19 who are in dire need. More than 29 million families or even above 50 percent of the people of Indonesia will enjoy the assistance in the form of cash, groceries, exemptions and discounts on electricity, to pre-work cards.
Then, a tax relaxation incentive support, assistance of more than 60 million micro, small, and medium enterprises (MSMEs) in the form of delays in installments, interest subsidies and additional working capital assistance. The government can also compile steps and policies in the framework of the Economic Recovery Program for businesses in the real sector and financial sector which includes MESMs, large businesses, and cooperatives whose business activities are affected by the epidemic.
At the same day, House speaker, Puan Maharani, also announced the parliament has agreed to discusses the 2021 State Budget. Indrawati proposed a fiscal deficit between 3.21 to 4.17 percent for next year to support the economic recovery after the pandemic ends.
Indonesian government expect the economic growth could rebound in 2021 between 4.5 to 5.5 percent of GDP from this year could drops to 2.3 of GDP. The country has sliced more than half of the growth targets from initial targets 5.01 percent of the GDP. On March 31, the head of state has widened the 2020 State Budget deficit from 2.5 percent to 5.07 of GDP to curb the country’ economy from the impact of COVID-19.
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