AIIB approves $ 1 billion loan for Indonesia’s response to COVID-19 – Business
Adrian Wail Akhlas (The Jakarta Post)
Tue 23 June 2020
The Asian Infrastructure Investment Bank (AIIB), a China-backed multilateral development bank, said on Tuesday it had approved a $ 1 billion loan to help bolster Indonesia’s health and economic responses to the COVID-19 crisis.
The first AIIB loan for Indonesia, totaling $ 750 million and co-financed with the Asian Development Bank (ADB), will be used for a project to support the economic recovery program of the Indonesia, including assistance to small and medium-sized enterprises and vulnerable households.
In addition, it also approved a loan of $ 250 million, in partnership with the World Bank, for a separate program to strengthen the public health care response to the crisis, including the detection, prevention and treatment of the disease. virus, and improve hospital preparedness.
“The COVID-19 pandemic has forced many developing countries to make difficult compromises to meet the urgent needs of their citizens. AIIB’s support to Indonesia will contribute to the government’s efforts to overcome these challenges in these very uncertain times, ”AIIB Vice President for Investment Operations DJ Pandian said on Tuesday in a statement. .
Indonesia, which saw the number of confirmed cases jump to more than 46,800 on Monday, requested the loan to fund its efforts to strengthen hospital preparedness, pandemic preparedness and testing capacity.
The government plans to borrow a total of $ 7 billion from multilateral organizations, including the AfDB, AIIB, the World Bank and the Japan International Cooperation Agency (JICA), government officials said last month.
The funds will be used to cover the growing budget deficit of 6.34%, more than double the original 3% cap, as the government allocates 695.2 trillion rupees ($ 49.3 billion) to finance the response to health care and prevent further economic collapse.
The government expects the economy to shrink 0.4% this year in a worst-case scenario or increase by 1% in a baseline scenario. This would be the weakest result since the Asian financial crisis hit the country’s economy in 1998 and 1999.
“We appreciate the AIIB for its swift response and flexibility when it comes to the urgent needs of member countries during health and economic crises,” Deputy Finance Minister Suahasil Nazara said in the joint statement with the AIIB.
“These loans are important for Indonesia to support healthcare and protect urgent social spending and expand social assistance programs to poor and vulnerable people to reduce the negative social and economic impacts of COVID- 19. “