The global economy is expected to expand 4 percent in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year - Photo: Special

JAKARTA (TheInsiderStories) – The World Bank approved two new projects totaling US$700 million to help Indonesia to respond to the COVID-19 pandemic, said the agency on Friday (05/15). The financing will help support the country to enhance its social protection system and strengthen the financial sector.

“The Government of Indonesia is cognizant of the significant impact of COVID-19 on the livelihood of so many people in different sectors in the regions all over Indonesia. With support from international institutions such as the World Bank, we are able to provide relief for different needs such as the provision of social assistance and maintaining the resilience of the country’s economy,” said minister of finance Sri Mulyani Indrawati.

She continued, the funds will support for various sectors to provide the necessary foundation which will enable further government actions to ensure the long-term recovery of the people and the economy. The first project approved is the $400 million Additional Financing for Social Assistance Reform Program.

The initial project approved three years ago has successfully supported the government’ flagship social assistance program—the Family Hope Program—to expand its coverage from six million to 10 million families, and to improve the program’ delivery systems and coordination with other social assistance programs.

It said, the ongoing pandemic has heavily affected the poor and vulnerable as well as informal workers. The additional financing will support a temporary emergency top-up benefit for the Family Hope Program’ 10 million beneficiaries to help them safeguard their livelihood. It will also support the ministry of social affairs to strengthen the capacity of its social protection system to scale up and provide timely protection to those affected by large-scale natural disasters and epidemic shocks in the future.

The Additional Financing for Social Assistance Reform Program will continue to support the strengthening of social assistances delivery systems and linking selected former PKH beneficiaries with the new Social Entrepreneurship program to improve their business skills. Further, it will support Indonesia’ Social Registry to include additional poor and vulnerable households and expand the use of this registry in disaster response.

The second project is the $300 million COVID-19 Supplemental Financing for Indonesia’ First Financial Sector Reform Development Policy Loan. The initial development policy loan was approved in March 2020 to help increase the depth, efficiency and resilience of the financial sector.

This supplemental financing will help the government cover an unanticipated financial gap that has arisen due to the pandemic, and help address the COVID-19 crisis by supporting the real economy, including channeling funds to households and firms, while maintaining the resilience of the financial sector.

“The unprecedented nature and reach of the COVID-19 outbreak and its negative impacts call for swift support by the World Bank globally. For Indonesia, we are supporting the government to continue to focus on protecting the most vulnerable and high-risk populations and enhancing the emergency preparedness for priority sectors,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste.

in Early April, the government has expanded the economic stimulus to Rp405.1 trillion (US$27.01 billion) to overcome the virus outbreak in the archipelago. According to the director general at the ministry, Askolani, in addition to pre-employment cards, the government will also provide economic stimulus to workers who have a Labor card and are exposed to terminate which estimated around 400,000. They, he said, would get help similar to the pre-work card scheme.

Another scheme that is being prepared with the social ministry affairs is for regions that have implemented Large-scale Social Restrictions will be given food package assistance in the form of commodities using the local government database. For Jakarta, a consortium lead by regional company, PD Pasar Jaya has been formed to distribute food packages every two weeks to the affected communities.

While, director general of treasury, Andin Hadiyanto explained, for the Pre-work Card will be given to 5.6 million people who are united with the social safety net package. In addition, the State Electricity Company customers will be given to 24 million families and will begin to implementing in this month.

Furthermore, the government will provide a postponement of installments and fulfillment of living needs worth Rp6.91 trillion for 11.4 million banking and non-banking creditors. This plan, he explained, was being consulted with banks and other financial institutions.

Then, director general of fiscal balance, Astera Primanto Bhakti added, that the government is also preparing funds for underprivileged families in villages that do not receive assistance from the central government and the regions. From the results of the provisional calculation there are 5.8 million families who will receive social assistance taken from village funds.

“It is planned that each family of Rp600,000 for three months,” he stated by adding the village fund that was used for cash forwards and community empowerment will have a new menu in the form of Direct Cash Assistance.

The ministry of villages in collaboration with the local government will record the families of potential recipients. For the affected areas the priority will be Java.

“Hopefully April has distributed village social assistance funds where the value is around Rp24 trillion or around 24 percent of the total village funds,” he concluded.

US$1: Rp15,000

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