Budget Reallocation to Focus on Covid-19

The government is reallocating and restructuring the state budget to focus on preventing and mitigating the economic impacts of the Covid-19. Consumer purchasing power and industrial performance must be maintained.

KOMPAS/YUNIADHI AGUNG

Passengers queue at a Transjakarta bus stop in Ciledug, Tangerang, Banten, on Monday (16/3/2020). Public transportation was reduced on a number of routes in Jakarta to help curb the spread of the COVID-19 coronavirus.

JAKARTA, KOMPAS – President Joko “Jokowi” Widodo has instructed the Cabinet and government agencies to reallocate and readjust the state budget towards preventing and mitigating the economic impacts of the Covid-19 pandemic. The instruction was also relayed to regional administrations, that they should reallocate the use of government funds with a similar focus.

"The instruction from the President is a policy to reallocate and restructure the ministerial, institutional and regional budgets. The focus is managing [the economic] problems caused by Covid-19, both direct and indirect," said Coordinating Human Development and Culture Minister Muhadjir Effendy on Monday (16/3/2020), following a Cabinet meeting conducted via video conferencing.

Also read : Indonesia Enters Critical Phase of Covid-19 Pandemic

The President, who presided over the meeting remotely from Bogor Palace in Bogor, West Java, also instructed ministries, government institutions and local administrations to set aside a budget for community assistance programs. The programs were to focus on strengthening consumer purchasing power, especially among lower-class consumers who had lost their means of income as a result of the Covid-19 outbreak in the country.

The focus is managing [the economic] problems caused by Covid-19, both direct and indirect.

The government also plans to provide a corporate stimulus package for companies whose productivity has been hard-hit by the outbreak to prevent them from laying off workers. "What [the stimulus package] will look like is to be followed up by the Finance Minister [Sri Mulyani] and the technical ministries in charge of the funds," said Muhadjir.

In addition, the President called for a budget reduction for official trips and meetings, and that the budget be reallocated to welfare activities supporting communities, laborers, farmers, fishermen, employees, and micro and small businesses.

"There is approximately Rp 40 trillion that can be used to finance programs that are directly related to public consumption, the purchasing power of farmers, fishermen, employees and laborers, as well as micro and small businesses. I believe the focus should be there,” President Joko Widodo said in a press statement.

KOMPAS/BAHANA PATRIA GUPTA

An officer sprays disinfectant in the Keputran Market, Surabaya city, East Java, on Monday (16/3/2020). At least 91 sprayers were deployed by the Surabaya government to sterilize a number of crowd points in the city. This was done to help curb the spread of the COVID-19 coronavirus.

Tighter supervision

Muhadjir said that supervision on budgetary use for Covid-19 prevention and control would be tightened, because social assistance funds presented a wider opportunity for misuse.

Finance Minister Sri Mulyani used her official social media accounts to post her activities on Saturday (3/14) and Sunday, including the Cabinet meeting conducted via video conferencing.

Sri Mulyani said she issued a circular to the relevant ministries and institutions to start reallocating and restructuring their budgets with a focus on managing the Covid-19 outbreak. She also issued a ministerial regulation as a legal basis for regional administrations to adjust the use of government funds towards preventing and mitigating the economic impacts of the outbreak.

Also read : Worried About Being Infected? Better Get Checked Out Now!

Ministerial spokesman Rahayu Puspasari said that the Finance Ministry had prepared a special assistance fund for procuring medical equipment and supporting healthcare measures to prevent and control the spread of Covid-19.

The Finance Ministerial Decree No. 6/KM.7/2020 on the disbursement of the special fund for the health sector and health measures to prevent and/or control coronavirus disease 2019 (Covid-19) was issued on Monday (16/3).

KOMPAS/ISMAIL ZAKARIA

Tourists await the arrival of a boat that is to take them to Bali from Bangsal Harbor in North Lombok regency, West Nusa Tenggara (NTB), on Monday (16/3/2020). The NTB provincial government\'s decision to suspend fast boat service from Bali to Lombok led to thousands of tourists leaving the island on Monday.

Disbursing the special Covid-19 medical fund requires the recommendation of the Health Ministry. Upon receiving the recommendation, the special fund is to be disbursed no later than seven working days after the State Treasury receives the document outlining the proposed activities and inputs the proposal to the integrated planning and budgeting information system.

"Regional administrations must submit a budget realization report on the special health fund for Covid-19 no later than November of the current budgetary year," said Rahayu.

House of Representatives Deputy Speaker Sufmi Dasco Ahmad from the Gerindra Party faction said that in addition to treating Covid-19 patients, the government also needed to focus on the potential impacts of the outbreak, especially its economic impacts. The longer the Covid-19 outbreak lasted, the greater the impact on the Indonesian economy.

According to Dasco, if the supply of raw materials to the country continued to be disrupted and the outbreak could not be halted immediately and continued until the second quarter of the year, a wave of layoffs would ensue because Indonesia’s production hubs would effectively stop operating.

"Therefore, the House reminds the government to prepare for the worst economic impacts from the spread of the coronavirus. Reduced income means reduced consumer purchasing power,” he said.

KOMPAS/TOTOK WIJAYANTO

Passengers queue at the MRT Fatmawati Station in South Jakarta on Monday (16/3/2020). Long queues formed because the company reduced the number of coaches on each train from 14 to only four, with departures changed from every 10 minutes to every 20. This was intended to help curb the spread of the COVID-19 coronavirus.

The Energy and Mineral Resources Ministry has adjusted the budget to mitigate the impact of the Covid-19 pandemic. This year, the budget allocation for the ministry reached Rp. 9.7 trillion. Official travels that are considered not urgent will be canceled.

Agung Pribadi, the ministry’s head of communication, public information and cooperation, said that the ministry had reevaluated the budget and diverted allocations for managing Covid-19. Meanwhile, electricity director general Rida Mulyana added that the ministry was gathering data on projects that involved workers or equipment from China and other affected countries.

"In the end, the projects could be delayed. The government cannot insist that projects be completed on schedule in the midst of a situation like this, "said Rida.

Challenges

Labor-intensive manufacturing industries and the informal sector would find it difficult to comply with the government’s call to work from home in order to minimize the spread of Covid-19.

Indonesian Footwear Association executive director Firman Bakri said that the social distancing policy could be interpreted as “working from home”. However, the policy would be difficult to implement in labor-intensive manufacturing companies, since their production equipment was only available on site.

Still, several companies are developing protocols to anticipate the spread of Covid-19 in the work environment. The priority remains ensuring the health and safety of workers, not profit and loss.

(NTA/INA/REK/DIM/AGE/APO)