An aerial view of a road in Jakarta capital of Indonesia (Photo: thejakartapost)Jakarta (VNA) - The Indonesian government is set to provide cash transfers andworking capital loans formicro, small and medium enterprises (MSMEs) in its latest bid to boost economicgrowth amid the COVID-19 pandemic.
DeputyMinister of State-Owned Enterprises Budi Gunadi Sadikin, who is also head of the national economic recovery taskforce, said on July 29 that the government would provide 2.4 million rupiah (165 USD) in cash each for 10 to 12million MSMEs, as well as working capital loans of 2 million rupiah for MSMEs.
The assistanceis expected to maintain people’s income and be used as working capital tosupport their businesses, he told reporters during a press briefing. Thegovernment will also add working capital loans with low interest for those whohave already started businesses.
President JokoWidodo has asked the national economic recovery task force to focus on boostingeconomic growth in the third quarter of 2020, as well as to maintain employmentand income levels to prevent a recession this year, Budi went on to say.
MSMEs havebeen particularly hit hard by the economic downturn, as the government expectsthe economy to grow by 1 percent at best or shrink by 0.4 percent at worst thisyear. It also forecasts a contraction of around 5 percent in the year’s secondquarter due to large-scale social restrictions to curb the spread of COVID-19.
The governmenthas allocated 695.2 trillion rupiah to strengthen the country’s virus responseand boost economic growth, expanding the fiscal deficit to 6.34 percent ofgross domestic product (GDP).
On the sameday, the government also guaranteed working capital loans worth 100 trillionrupiah for labour-intensivebusinesses to help them survive the pandemic.
FinanceMinister Sri Mulyani Indrawati stated that to be eligible for the loanguarantee programme, firmsare required to employ at least 300 individuals, prove that their activitieshave been affected by the pandemic, and have a good track record of paying back loans, according to theminister.
Amid theuncertainty about how long the COVID-19 pandemic battle will need to be fought,the government has announced that it will raise its 2021 state budget deficitassumption to 5.2 percent of GDP. The change will be proposed to the House ofRepresentatives, which previously agreed to the government’s proposal of adeficit between 4.17 percent and 4.7 percent of GDP./.
VNA
