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ADB approves $500m disaster resilience loan for Indonesia

Jakarta Post - September 24, 2020

Dzulfiqar Fathur Rahman, Jakarta – The Asian Development Bank (ADB) has approved a multimillion-dollar loan to support Indonesia's disaster resilience by providing quick access to emergency financing during the coronavirus pandemic. The US$500 loan contributes to expanding Indonesia's disaster management allocation to 1 percent, from 0.04 percent in the 2019 state budget.

The loan facility is part of the ADB's Disaster Resilience Improvement Program that offers contingent disaster financing following the declaration of disaster or health emergencies.

The coronavirus epidemic, which Indonesia declared a health emergency on March 31, has reached a cumulative total of 257,388 confirmed cases and 9,977 COVID-19 deaths as of Wednesday, and led to a second-quarter economic contraction of 5.32 percent year-on-year.

"The program aims to help the government boost environmental sustainability, disaster and climate resilience and human capital development, including health and gender equality," financial sector specialist Benita Ainabe of the ADB said in a statement issued by the bank on Wednesday.

"It will help the government develop recovery and reconstruction plans with greater certainty, reduce infrastructure damage and prevent the loss of life in future disasters," she said.

The development bank was established in 1966 to focus on engendering development and cooperation in the Asia-Pacific region and currently has 68 member countries. It previously approved a $1.5 billion loan for Indonesia's coronavirus response in April.

The administration of President Joko Widodo has allocated Rp 695.2 trillion ($46.8 billion) for a coronavirus relief package to support the healthcare system and facilitate economic recovery programs, of which it has spent 36 percent to date.

The ADB disaster resilience program is part of its newly endorsed 2020-2024 country partnership strategy for Indonesia, under which the bank plans to extend $10.7 billion in loans between 2020 and 2023. The partnership strategy is intended to help Indonesia attract more infrastructure investments through public-private partnerships and to promote gender equality through greater access to formal banking for Indonesian women.

The bank also plans to improve the use of technology in its projects, such as the use of satellite technology for flood mapping.

"The new country partnership strategy reflects ADB's strong commitment to helping Indonesia boost human development, improve economic competitiveness and address disaster risks and environmental sustainability, amid heightened economic uncertainty and rising global threats such as climate change," ADB president Masatsugu Asakawa said in the statement from the bank.

"The strategy provides a flexible and agile framework for ADB to help Indonesia incorporate green recovery and other sustainable development options, while strengthening domestic resource mobilization to support the recovery efforts," he continued.

The bank's strategy aligns with Indonesia's 2020-2024 National Medium-Term Development Plan, or RPJMN.

"We greatly appreciate the ADB's strong support for Indonesia over the years, especially the speed of the ADB's response and its close and active engagement with the government during the COVID-19 pandemic," the statement quoted Finance Minister Sri Mulyani Indrawati as saying.

"The partnership strategy positions the ADB as a key partner with innovative solutions to complex development challenges. We welcome the ADB's focus on inclusive, competitive and sustainable development," she said.

Source: https://www.thejakartapost.com/news/2020/09/24/adb-approves-500m-disaster-resilience-loan-for-indonesia.html