Indonesia Unveils Fresh Stimulus to Counter Virus Impact

(Bloomberg) — Indonesia unveiled an emergency fiscal stimulus plan worth 22.92 trillion rupiah ($1.55 billion) as it seeks to protect Southeast Asia’s largest economy from the coronavirus crisis.

The package announced Friday, which includes a raft of tax breaks, would contribute to a widening of the budget deficit to 2.5% of gross domestic product, compared to an initial target of 1.76%, Finance Minister Sri Mulyani Indrawati said. “These won’t be the last measures,” she said.

The new package, which follows $745 million in stimulus announced last month, comes amid a deteriorating outlook for Indonesia’s economy. Despite only 34 confirmed cases of Covid-19 so far, 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 more than 7% in the past month.

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The announcement comes as governments around the world offer stimulus and take other steps to shield their economies from the impact of the outbreak.

Tourism bore the initial brunt of the virus’s economic fallout, but the impact is now spreading to other sectors, Indrawati said. While last month’s package aimed at supporting the tourism sector and low-income households, the new stimulus targets manufacturers.

Highlights of Friday’s package include:

• Import tax waived for 6 months on some goods
• Corporate tax reduced by 30% for 6 months for 19 sectors
• Government to cover income tax for workers with gross income below 200 million rupiah per year in some manufacturing industries

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