Indonesia gets $876m loan from Germany's state bank to fight Covid-19

Jakarta has sought to finance the deficit with bilateral and multilateral loans and debt sales.
Jakarta has sought to finance the deficit with bilateral and multilateral loans and debt sales.PHOTO: AFP

JAKARTA (REUTERS) - Indonesia has secured a €550 million (S$876 million) loan from Germany's state bank KfW to fund its fight against the Covid-19 pandemic, Jakarta's embassy in Berlin said.

The proceeds would be used to upgrade hospitals and procure medical equipment, among other things, the embassy said in a Facebook post this week.

The government of South-east Asia's largest economy expects its budget deficit this year to swell to 6.34 per cent of gross domestic product, the biggest in decades, as it increases spending to combat the pandemic's impact. Indonesia has the highest number of coronavirus cases and fatalities in Southeast Asia.

Jakarta has sought to finance the deficit with bilateral and multilateral loans and debt sales, including selling bonds directly to the central bank.

Last week, Indonesia signed a A$1.5 billion (S$1.47 billion) loan agreement with the Australian government.