President: Reallocate Regional Budgets for Covid-19 mitigation

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President Joko Widodo issues Presidential instruction Number 4 of 2020 concerning the Refocusing of Activities, Reallocation of Budgets, and Procurement of Goods and Services in order to Accelerate Covid-19 Mitigation. (Photo: Prive. Doc)

IO, Jakarta – A steady increase in the number of patients declared positive for Coronavirus has impelled the Government to allow Regional Heads leeway for mitigating the pandemic. As of Tuesday, 24 March 2020, the number of infected patients is 686, with 55 deaths and 30 recoveries. Therefore, President Joko Widodo has instructed Regional Governments to reallocate funds from less important budget items in the Regional Budget to mitigating Coronavirus. 

The President stated that budgets for travel, meetings and other expenditures that do not effect any direct result on the people must be reduced immediately, as our current fiscal condition is far from ideal. “I request that Regional Heads refocus their activities and reallocate their budget to accelerate Covid-19 mitigation, whether for health purposes or social aid to mitigate economic issues,” Jokowi declared in a video conference with Governors, broadcasted from Merdeka Palace, Jakarta, on Tuesday (24/03/2020). 

President Jokowi stated that he has created a legal basis for budget reallocation, by issuing Presidential Instruction Number 4 of 2020 concerning the Refocusing of Activities, Reallocation of Budgets, and Procurement of Goods and Services in order to Accelerate Covid-19 Mitigation. 

Presidential Spokesman Fajdroel Rachman explained that the planned financial capital boost is intended to procure required medical equipment for mitigating Coronavirus. Financial boosting is also meant to maintain the people’s socio-economic security. “For this purpose, the Government has reallocated ministry and agency budget items that are considered to be non-urgent towards mitigating Coronavirus and providing social aid for citizens in all regions.” 

The Government will also accelerate the import of required medical equipment. Fadjroel stated that each leaders in the relevant ministries will issue a mandate for the exception of import trade permits to the Executive Chiefs of the Coronavirus Mitigation Task Forces. Afterwards, the Executive Chiefs or other appointed officials will issue recommendations for these import trade exceptions online, especially for medical equipment. “The Coronavirus Mitigation Task Forces now has the three necessary elements for disaster mitigation, i.e., a responsive organizational system, financial capital and rapid reaction mechanisms,” he said. 

All of these policies are in line with the Government’s focus on mitigating Coronavirus cases, i.e. focus on health, social safety net, and the economy. President Jokowi further reminded governors that Corona mitigation is not just about ensuring public health, but also about mitigating economic impact through social aid. He instructed Regional Heads to provide help for citizens affected by the policy of physical distancing necessitated by the Covid-19 pandemic. “Please make sure that you really look into the condition of laborers, especially daily laborers, farmers, fishermen, and those who are first and worst hit, the micro and small businesspeople. We need to work in order to maintain purchasing power and production,” he said. 

He gave an example, citing how the Central Government has given a year’s delay for motorcycle transportation workers and taxi drivers’ vehicle installments, as well as delayed instalment payments and reduced interest rates for micro, small, and medium businesses with outstanding credits below IDR 10 billion. He requests similar measures from Regional Governments. “Therefore, please direct all provincial, regency, and municipal activities to allow these programs to run as cash, work-intensive programs. This is necessary for maintaining public purchasing power,” he said. 

Supporting the President’s Policies 

Similarly, Minister of Finance Sri Mulyani Indrawati said that Government will reallocate certain budgetary expenditures in the 2020 State Budget. “In order to satisfy the many requests made for urgent health needs, we have identified up to IDR 62.3 trillion of ministry and agency expenditures that we can reallocate according to the current priority, as declared by the President,” she said recently in Jakarta. “These include official travel, non-operational expenditures, fees and blocked funds. We are allocating reserve output for mitigating Covid-19. The President plans to withdraw 50% of the ministries and agencies’ work budget this year, at IDR 4.3 trillion, for Coronavirus mitigation purposes. In other words, we are reallocating IDR 2.15 trillion from these expenditure items.” 

Sri Mulyani will also waive entry tariffs for businesses that import materials for researching and developing Coronavirus vaccines and prophylaxis. This waiver applies to both private and State-Owned Enterprises. Entry tariff waivers are also granted to all hospitals that import drugs and medical equipment. Delivery costs of medicine and medical equipment aids from other countries are also freed from import duties. 

In support of President Jokowi’s policies, the Speaker of the House (DPR) Puan Maharani requests that the budget be used to increase the volume of personal protective equipment for medical staff in hospitals, free medication for Covid-19 patients, and procurement of equipment and facilities for free mass screening tests of the virus – “…along with other efforts to prevent the spread of the Coronavirus,” she said. 

Trillions of Rupiah 

Puan further requests the Government to strengthen public purchasing power and mitigate the economic impact of Coronavirus. She stated that the budget can be reallocated to programs that would do this, especially for those citizens who have lost income because of social distancing, “And to provide incentive to the medical workers involved in the mitigation of the Corona pandemic,” she said. 

Puan further requested that the Government anticipate a spike in inflation due to a continued rise in the prices of basic necessities. The Government, especially the Ministry of Industry, Ministry of Trade, Ministry of Health, Ministry of State-Owned Enterprises, and the Indonesian Bureau of Logistics (Badan Urusan Logistik – “Bulog”) need to coordinate to strengthen the security of our food stock and our medical equipment and protective equipment stock because of the spike in the demand and purchase of these goods. 

She further requests the Government and Bank Indonesia to coordinate, in order to mitigate the weakening of the Rupiah. Other than issuing effective monetary policies, the Government can take measured and credible steps to strengthen the market’s trust and confidence, which in turn will mitigate the drop in Rupiah value. “DPR, through its relevant commissions, will monitor the use of the reallocated budget so that they harmonize with the needs of Coronavirus mitigation programs and economic impact mitigation programs,” Puan said. 

Meanwhile, Deputy Speaker of the Regional House of Representatives (DPRD) of DKI Jakarta Mohamad Taufik said that the Governor of DKI Jakarta, Anies Baswedan, can reallocate the use of non-priority budget items such as regional investment for Region-Owned Enterprises, Formula E, etc. There should be no problem in reallocating the budget towards Covid-19 mitigation, as the people’s health and safety are top priorities. 

Taufik estimates that the total of reallocated budgets can reach trillions of Rupiah, which would be a great help for citizens affected by the illness. “For example, there are 1.1 million daily laborers in Jakarta, and these people need the help most. Governor Anies can reallocate his budget for them, and report this budget use to the DPRD,” he said. “I request that the pay of these daily laborers in the DKI Government not get cut. The same thing with private businesses – even though their employees currently cannot work, their wages must be paid in full. This is a pandemic; everyone should support one another.” (dan)