Indonesia gets $1B Aussie loan to offset virus impact

Indonesia has received a loan of AUD1.5 billion (USD1.07 billion) from Australia to deal with the economic fallout of the COVID-19 pandemic, the country's finance minister said on Thursday.

"We really appreciate the support from various sources, including loan support from Australia,” Sri Mulyani Indrawati told a virtual conference.

She said the loan will be allocated for fiscal sector to help businesses and micro, small and medium enterprises, as well as manage fiscal sustainability.

Sri Mulyani explained that the support would be helpful for a fast and strong economic recovery.

"We all know and understand that COVID-19 brings challenges for all of us, especially for both of us as finance ministers," the minister, who was joined by her Australian counterpart Josh Frydenberg via video link.

Indonesia will continue to formulate fiscal policies to support the health sector and social safety nets, she said.

“We feel that this kind of partnership underlines not only the strong relationship between Indonesia and Australia but also mutual understanding as neighboring countries who have a common goal. We cannot recover by ourselves from this pandemic,” she said.

Meanwhile, Frydenberg said the Indonesian government have focused on protecting citizens from the “worst of the pandemic."

The loan is a recognition of Indonesia’s record of sound fiscal management, he said, adding: “A quick and strong recovery is critical not only for Indonesia but also for Australia and our region."

The Southeast Asia’s largest economy has been hit hard by the pandemic as efforts to contain coronavirus dealt a blow to consumer demand and business activity.

Its economic growth plunged by 3.49% in the third quarter of this year, after a 5.32% decline in the previous three months.

Indonesia has recorded the highest number of virus cases and related deaths in Southeast Asia with over 452,000 infections and nearly 15,000 fatalities.

*Writing by Maria Elisa Hospita from Indonesian language services in Jakarta