"The El Nino has resulted in a hike in prices of commodities, such as rice, which, in turn, led to a high inflationary pressure. Hence, we need to use APBN to provide protection by intensifying social aid distribution," Finance Minister Sri Mulyani Indrawati noted in a statement received in Jakarta on Friday.
Apart from the 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, she remarked.
The minister noted that the high interest rates in developed countries and the weakening global economic outlook had hit the Indonesian economy and people.
Indrawati then explained that 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.
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 Rp2.67 trillion (US$167.4 million) will be allocated to provide 10 kilograms of rice to as many as 21.3 million beneficiaries in December, she noted.
Furthermore, direct cash aid of Rp200 thousand (US$12.5) will be given to a total of 18.8 million beneficiaries per month from November until December, absorbing Rp7.52 trillion (US$471.6 million) of APBN, she remarked.
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). Indrawati remarked that the government is targeting to disburse Rp297 trillion (US$18.6 billion) in KUR this year.
Meanwhile, the last package pertains to the strengthening of the housing sector in the hopes of facilitating low-income people to get houses, she stated.
The state treasurer explained that the government will implement the package by bearing value-added tax for the sale of new houses that are worth under Rp2 billion (US$125.4 thousand).
For low-income people, she stated that the government will provide administrative fee assistance of Rp4 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, she pointed out.
"Hopefully, all these measures will help our economy survive from global uncertainties," she concluded.
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Translator: Imamatul S, Tegar Nurfitra
Editor: Azis Kurmala
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