Indonesia lifts economic recovery budget again to over $49 billion

Indonesia has again raised the budget for its National Economic Recovery (PEN) program, which includes its mass vaccination campaign, to now reach 688.33 trillion rupiah ($49.48 billion), its finance minister said on Monday, February 15.

Initially earmarked at 372.3 trillion rupiah, Finance Minister Sri Mulyani Indrawati has gradually lifted the program’s budget several times. Earlier this month, she put the value at 619 trillion rupiah.

The new increase came after Southeast Asia’s largest economy last year recorded a full-year gross domestic product (GDP) contraction of 2.1%, its first since 1998, which the central bank said was softer than expected.

“Our PEN budget for 2021 will reach 688.3 trillion rupiah, which if you compare with 2020’s 579 trillion rupiah, shows a significant increase, especially in healthcare spending,” she said in a presentation to security forces.

Health care’s share would reach 173.3 trillion rupiah for 2021, up from 63.5 trillion rupiah last year, including for the vaccination campaign, Sri Mulyani said.

The budget for social assistance would be 150.21 trillion rupiah, below last year’s 220.4 trillion.

Indonesia launched its vaccination drive last month and aims to inoculate more than 180 million people. It has among Asia’s highest number of coronavirus cases.

Sri Mulyani did not mention the impact of the increase on the government’s budget deficit plan.

Her presentation showed that under the assumption the PEN program had a total budget of 627.9 trillion rupiah, the budget deficit estimate would remain at 5.7% of GDP, below last year’s 6.1%.

A finance ministry official separately said the PEN budget could change as the government was still working on more detailed spending plans.

Meanwhile, the central bank is this week expected to cut interest rates for the first time this year, on top of 2020’s 5 rate cuts, to boost recovery from the impact of the pandemic, according to a majority of analysts in a Reuters poll. – Rappler.com