JAKARTA—Indonesia plans to announce economic stimulus measures on June 5 to revive activity and boost consumer purchasing power, hoping to push economic growth to around 5 percent this quarter, the Coordinating Ministry of Economic Affairs said on Saturday.
“These programmes are prepared to encourage growth by increasing consumption,” chief economic minister Airlangga Hartarto said in a statement, adding that launching the measures before a school holiday starting in late June would provide momentum to boost purchasing power.
Southeast Asia’s largest economy grew 4.87 percent in the first quarter from the same period last year, its weakest in more than three years. The central bank trimmed its 2025 growth forecast to between 4.6 percent and 5.4 percent from a 4.7 percent-5.5 percent range.
The ministry is still calculating the size of the stimulus package, which is meant to boost growth in the second and third quarters, a spokesperson said.
The incentives include a 50 percent discount on electricity bills for around 79.3 million households and food handouts for 18.3 million lower-income households in June and July.
The government also plans to give cash transfer for low-income workers and a discount on work accident insurance for workers in labour-intensive industries.
To boost tourism, the government said there will be discounts on airfare, train and sea transportation rates during the school holiday, which runs through mid-July, and discounts on highway tolls for 110 million users in June and July, the ministry said.
Meanwhile, the Indonesian central bank’s policy to cut a secondary reserve requirement to 4 percent from 5 percent starting from June will provide banks with 78.45 trillion rupiah ($4.84 billion) of liquidity they can manage more flexibly, a senior official said.
The comments were made by Solikin M. Juhro, Bank Indonesia’s head of macroprudential policy, at a press conference.
The central bank announced the planned reduction last week, when it also delivered its third interest rate cut since September, intended to bolster growth in Southeast Asia’s biggest economy. BI has also announced it would increase the maximum level of foreign funding local banks can take, to 35 percent of their capital from 30 percent, starting from June, a policy also meant to increase liquidity and support loan growth, Solikin said.
