2 days ago
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JAKARTA: Indonesia's economic policy package aimed at stimulating demand, which includes fare subsidies as well as cash and food handouts over June and July, will cost the government 24.44 trillion rupiah (US$1.5 billion), the finance minister said on Monday (Jun 2).
State-owned companies will cover around 850 billion rupiah in costs for policies like subsidising highway toll fares, while the rest will come from the government's coffers, Sri Mulyani Indrawati said.
The Indonesian government had announced last month on May 24 that it is rolling out a slew of stimulus measures to get its people to spend more in the next two months, with the finance minister providing further details on the costs on Monday.
On May 27, the government announced discounts on electricity bills and transportation costs as well as cash and food handouts to selected households that will begin on Jun 5.
With the upcoming school holidays set to take place between Jun 28 and Jul 12, it also revealed plans to boost domestic tourism and consumption by offering discounts on train tickets and sea transport services.
"With these economic stimuli ... we hope economic growth in the second quarter can be kept close to 5 per cent, compared to our previous forecast of a slowdown due to global conditions," Sri Mulyani said on Monday.
The Southeast Asia's largest economy grew 4.87 per cent on a yearly basis in the first quarter, its weakest pace in over three years and hit by falling household spending. The forecast for the rest of the year is also clouded by a troubling global trade outlook.
Analysts told CNA earlier that the slew of measures may not be enough to revive sluggish domestic consumption and lift economic growth as broader moves are needed to help the country's middle class and protect businesses from the effects of higher United States tariffs.
Sri Mulyani also said on Monday said the government had decided to cancel a plan to cut some electricity tariffs by as much as 50 per cent because the budgeting process would take too long.
Instead, she said that the budget initially allocated for the electricity discount will be directed to the Wage Subsidy Assistance programme for workers earning below 3.5 million rupiah per month, local news outlet Jakarta Globe reported.
