April 29, 2020 / 8:50 AM / a month ago

Indonesia to defend coronavirus spending in top court

JAKARTA (Reuters) - The Indonesian government will defend its emergency regulation for a massive spending increase to cushion its economy against the impact of the novel coronavirus pandemic, an official said on Wednesday, as the Constitutional Court reviewed its legality.

People practice social distancing while buying vegetables amid the coronavirus disease (COVID-19) outbreak in Depok, near Jakarta Indonesia, April 28, 2020. REUTERS/Ajeng Dinar Ulfiana

President Joko Widodo announced the regulation in lieu of a law known by its Indonesian abbreviation “Perppu” in late March, as he declared a public health emergency over the COVID-19 outbreak in the world’s fourth most populous country.

The Perppu, which took effect immediately but must be approved by parliament to remain effective, allows Widodo to roll out some $25 billion of spending for COVID-19 response, including for welfare programmes and economic stimulus.

It also contains provisions that waive a cap on the maximum budget deficit per fiscal year for three years, cut the corporate tax rate and set out a new financial crisis management protocol.

The Constitutional Court has already begun hearing three requests for judicial review against the Perppu earlier this week, but has asked petitioners to improve their papers and resubmit before May 11, it said in a statement.

The petitioners include Amien Rais, former head of the People’s Consultative Assembly - Indonesia’s highest parliamentary body, former chairman of Islamic group Muhammadiyah, Din Syamsuddin and senior economic professor at the University of Indonesia Sri Edi Swasono.

They argue that there was no immediate emergency behind the Perppu, while the regulation’s content took away too much power from parliament and gave impunity to policymakers, according to the court.

Luky Alfirman, the finance ministry’s head of financing department, said the government would defending its regulation in the court and seek parliamentary approval.

“The government is committed to see what’s going on about this (Perppu) in these two areas,” he said in a call with investors.

Finance Minister Sri Mulyani Indrawati has previously said the Perppu gave legal protection for policymakers who must make an immediate decision in the face of a crisis. She has also pledged good governance.

Indonesia has officially reported 9,511 coronavirus cases, with 773 deaths, although some medical experts are concerned relatively low testing is masking a much higher rate of infection.

Reporting by Tabita Diela, Gayatri Suroyo and Fransiska Nangoy; Editing by Simon Cameron-Moore

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