Indonesian President Joko Widodo declared a public health emergency over the coronavirus epidemic on Tuesday and said an additional $24.9 billion would be spent to cushion its impact on Southeast Asia's biggest economy.
Widodo said he signed a new regulation that "gives financial authorities the power to take extraordinary steps to ensure public health, save the national economy and the financial system".
The regulation would waive a cap on a maximum budget deficit for three years, he said.
"The government decided that the total additional spending to manage COVID-19 is as much as 405.1 trillion rupiah," he said adding that this will widen the 2020 budget deficit to as much as 5.07% of gross domestic product, the widest in more than a decade.
The stimulus package includes a 3-percentage-point reduction in the corporate tax rate to 22%, he said.
Other measures include expanding social welfare to benefit up to 10 million households, food assistance and electricity tariff discounts and waivers, he told reporters.
Shortly after Widodo's announcement, the central bank trimmed its 2020 gross domestic product growth outlook for a third time this year, to 2.3%-2.5%, from the latest 4.2%-4.6%, taking into account the government's new measures, Governor Perry Warjiyo told a call with investors.
The new growth forecast is the weakest since 2001 and compares with 5.02% in 2019.
Warjiyo also warned there would be short-term economic contraction due to curbs on people's mobility, after Widodo ordered "large-scale social limits" and stricter rules on physical distancing on Monday.
Medical experts have said Indonesia, the world's fourth-most-populous country, must impose tighter restrictions on movements. Known cases of the disease have gone from none in early March to 1,528, with 136 deaths.
Indonesia suspended all foreign arrivals on Tuesday after a study showed more than 140,000 people in the country could die of the virus without tougher action.
Fear about the disease and its impact on livelihoods is spreading.
"The impact of the virus can be felt a lot already," said Ajun, 46, a motor-bike driver for ride-hailing app Gojek.
He said he used to get up to 20 jobs a day before the outbreak but now got five at most.
"I'm scared ... but I have a family that I have to provide for ... where would I get money from?" said the father of two.
($1 = 16,300.0000 rupiah)
(Additional reporting by Wilda Asmarini, Tabita Diela, Agustinus Beo Da Costa and Bernadette Christina Munthe; writing by Fathin Ungku and Gayatri Suroyo; editing by Andrew Heavens, Robert Birsel, Larry King)
