Indonesia unveils more emergency stimulus to fight virus fallout

Jakarta

INDONESIA unveiled an emergency fiscal stimulus plan worth 22.92 trillion rupiah (S$2.2 billion) as it seeks to protect South-east Asia's largest economy from the novel coronavirus crisis.

The package announced on Friday, which includes a raft of tax breaks, would help push the budget deficit to 2.5 per cent of gross domestic product, from an initial target of 1.76 per cent, Finance Minister Sri Mulyani Indrawati said. "These won't be the last measures," she said.

The new package, which follows US$745 million in stimulus announced last month, comes amid a deteriorating outlook for Indonesia's economy.

The country has been hit hard by the risk aversion sweeping global markets, with Indonesia's stock index now in bear territory and the currency down about 7.5 per cent in the past month. As the virus continues its rapid spread beyond China, governments around the world are boosting stimulus and taking other steps to protect their economies.

Central banks are also stepping up action with emergency rate cuts aimed at countering the economic fallout.

In Indonesia, policymakers are turning to measures deployed during the global financial crisis more than a decade ago. Bank Indonesia, which cut interest rates by 25 basis points last month, is under pressure to lower them again at next week's policy meeting.

The bank bought six trillion rupiah of government bonds on Friday to prop up financial markets and stem a rout in the currency, adding to the eight trillion rupiah of bonds it bought on Thursday. BLOOMBERG