World Bank Approves Financing to Support Indonesia’s Social Assistance System and COVID-19 Response
The World Bank’s Board of Executive Directors today approved two new projects totaling $700 million to help Indonesia to respond to the COVID-19 pandemic. The financing will help support the country to enhance its social protection system and strengthen the financial sector.
“The Government of Indonesia is cognizant of the significant impact of COVID-19 on the livelihood of so many people in different sectors in the regions all over Indonesia. With support from international institutions such as the World Bank, we are able to provide relief for different needs such as the provision of social assistance and maintaining the resilience of the country’s economy. Support for these sectors provide the necessary foundation which will enable further government actions to ensure the long-term recovery of the people and economy of Indonesia,” said Minister of Finance of the Republic of Indonesia, Sri Mulyani Indrawati.
The first project approved is the $400 million Additional Financing for Social Assistance Reform Program. The initial project approved three years ago has successfully supported the government’s flagship social assistance program—the Family Hope Program or PKH—to expand its coverage from 6 million to 10 million families, and to improve the program’s delivery systems and coordination with other social assistance programs.
The ongoing pandemic has heavily affected the poor and vulnerable as well as informal workers. The additional financing will support a temporary emergency top-up benefit for PKH’s 10 million beneficiaries to help them safeguard their livelihood. It will also support the Ministry of Social Affairs to strengthen the capacity of its social protection system to scale up and provide timely protection to those affected by large-scale natural disasters and epidemic shocks in the future.
The Additional Financing for Social Assistance Reform Program will continue to support the strengthening of PKH’s delivery systems and linking selected former PKH beneficiaries with the new Social Entrepreneurship program to improve their business skills. Further, it will support Indonesia’s Social Registry (DTKS) to include additional poor and vulnerable households and expand the use of this registry in disaster response.
The second project is the $300 million COVID-19 Supplemental Financing for Indonesia’s First Financial Sector Reform Development Policy Loan. The initial development policy loan was approved in March 2020 to help increase the depth, efficiency and resilience of the financial sector. This supplemental financing will help the government cover an unanticipated financial gap that has arisen due to the pandemic, and help address the COVID-19 crisis by supporting the real economy, including channeling funds to households and firms, while maintaining the resilience of the financial sector.
“The unprecedented nature and reach of the COVID-19 outbreak and its negative impacts call for swift support by the World Bank globally. For Indonesia, we are supporting the government to continue to focus on protecting the most vulnerable and high-risk populations and enhancing the emergency preparedness for priority sectors,” said Satu Kahkonen, World Bank Country Director for Indonesia and Timor-Leste. “In the long run, such preparedness and ability to minimize the impact is critical for the government’s continued efforts to reduce poverty and protect the country’s human capital.”
The World Bank Group’s Operational Response to the COVID-19 Pandemic
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. We are increasing disease surveillance, improving public health interventions, and helping the private sector continue to operate and sustain jobs. Over the next 15 months, we will be deploying up to $160 billion in financial support to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery, including $50 billion of new IDA resources in grants or highly concessional terms.