Indonesia plans to issue bonds to cushion risks of COVID-19 outbreak on businesses

Source: Xinhua| 2020-03-26 20:35:58|Editor: Liu
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JAKARTA, March 26 (Xinhua) -- The Indonesian government plans to issue bonds to help pare down the impacts of the COVID-19 outbreak on the business sector, a senior official said on Thursday.

The debt papers, the so-called "recovery bonds", will be issued in rupiah and will be sold to the central bank (Bank Indonesia), exporters and importers, Secretary to the Coordinating Ministry of Economy Susiwijono Moergiarso said.

The proceeds would be used to help finance programs to rescue businesses which are disrupted by the COVID-19 outbreak and prevent layoffs, he said.

They will be disbursed through special loans for the business sector, the official said.

"The special loans will be disbursed to the easiest possible, so that the businessmen can use the loans to help shore up their businesses," he said.

To get the special loans, firms have to maintain at least 90 percent of their workforce without trimming their wages, said Moergiarso.

A rule will be issued to pave the way for the central bank to purchase the planned bonds and the draft for the new rule is expected to be issued on Friday, according to him.

The new rule would allow Bank Indonesia to purchase the government debt papers not only in the secondary market, he added.

The COVID-19 pandemic has dragged down Indonesia's exports and imports of capital goods and raw materials, and weakened business activities.

Indonesian Finance Minister Sri Mulyani Indrawati has said that the government baseline scenario is that the economy will go at a slower pace to 4 percent this year from 5.02 percent last year, but the growth could fall to between 0 percent and 2.5 percent if the COVID-19 outbreak lasted between three and six months.

The COVID-19 virus has killed 78 people and infected 893 others in Indonesia with 35 patients recovered, the government's spokesman for the virus-related matters Achmad Yurianto announced on Thursday.