AIIB approves USD1 billion in loans to Indonesia for COVID-19 response

The Asian Infrastructure Investment Bank (AIIB) has approved a total of USD1 billion in loans for two projects in Indonesia as part of a coordinated international effort to support the Indonesian Government’s plans to strengthen the country’s social safety nets, bolster its health response and stem the economic downturn from the coronavirus health crisis.

The first loan, totaling USD750 million and co-financed with the Asian Development Bank, will go toward bolstering economic aid for businesses, including small and medium-sized enterprises, support for poor and vulnerable households, and strengthening the country’s health care systems.

AIIB, in partnership with the World Bank, has approved an additional USD250 million to further strengthen the government’s immediate health response, which includes readiness for testing, surveillance, prevention, and treatment of COVID-19, as well as hospital readiness.

“The COVID-19 pandemic has forced many developing countries to make difficult trade-offs to meet the urgent needs of their citizens. AIIB’s support for Indonesia will contribute to the government’s efforts to navigate these challenges during highly uncertain times,” said AIIB Vice President, Investment Operations, D.J. Pandian.

The pandemic is expected to further strain Indonesia’s health system, which aims to catch up to its regional peers in terms of main health indicators. Meanwhile, projections for economic growth in 2020 forecast a sharp drop from the pre-COVID-19 projection of 5 percent to 2.3 percent, according to the government. It is further estimated that job losses due to the shutdown of the economy could be in the range of one million to seven million.

While AIIB does not have a regular instrument for policy-based financing, the Bank is extending such financings on an exceptional basis under the COVID-19 Crisis Recovery Facility to support its members through projects cofinanced with the World Bank or the Asian Development Bank.

Original source: AIIB
Published on 23 June 2020