Indonesia Rolls Out Policy Package to Mitigate El Nino Impacts

Jakarta – The Indonesian Government officially launched an economic policy package based on the State Budget (APBN) to mitigate adverse impacts of the prolonged dry season induced by the El Nino phenomenon. 

"The El Nino has resulted in a hike in prices of commodities, such as rice, which, in turn, led to a high inflationary pressure. Therefore, we need to use State Budget to provide protection by intensifying social aid distribution," Finance Minister Sri Mulyani Indrawati stated in a statement received in Jakarta on Friday.

In addition of El Nino effects, the policy package is also targeted at mitigating the impacts of global economic turmoil and the slowing down of China's economy. 

Minister Indrawati also said that the high interest rates in developed countries and the weakening global economic outlook had hit the Indonesian economy and people.

"The economic policy package consists of three packages, including one related to the efforts to intensify the distribution of social aid in the form of rice and cash," the Minister further explained. 

According to the minister, the package is aimed at maintaining the people's purchasing power, stabilizing prices, and controlling the inflation rate.

A budget of IDR 2.67 trillion (US$167.4 million) will be allocated to provide 10 kilograms of rice to as many as 21.3 million beneficiaries in December, the Minister remarked. 

Furthermore, direct cash aid of IDR 200 thousand (US$12.5) will be given to a total of 18.8 million beneficiaries per month from November until December, absorbing IDR 7.52 trillion (US$471.6 million) of State Budget, the Minister added.

Moreover, Minister Indrawati detailed that the second package is directed at optimizing the role of micro, small, and medium enterprises by expediting the disbursement of smallholder business credit (KUR). 

"The government is targeting to disburse IDR 297 trillion (US$18.6 billion) in KUR this year," the Minister remarked. 

Meanwhile, the last package pertains to the strengthening of the housing sector in the hopes of facilitating low-income people to get houses, the Minister stated.

Minister Indrawati also explained that the government will implement the package by bearing value-added tax for the sale of new houses that are worth under IDR 2 billion (US$125.4 thousand).

For low-income people, she stated that the government will provide administrative fee assistance of IDR 4 million (US$250 thousand) per house for 14 months.

In addition, the government will expand the number of recipients of the Integrated Welfare Home (RST) Program by 1,800 to help the poor.

"Hopefully, all these measures will help our economy survive from global uncertainties," The Minister concluded.