* Finmin forecast Q1 GDP growth at 4.5%-4.9%
* At least $1.1 bln of budget reallocated for healthcare
* Budget deficit seen at 2.5% of GDP but bond sales reduced (Adds details, direct quote)
By Tabita Diela and Gayatri Suroyo
JAKARTA, March 18 (Reuters) - Indonesia is shifting at least $1.1 billion of its budget to support healthcare amid the coronavirus outbreak, its finance minister said as she warned economic growth could slow to the weakest in years.
Southeast Asia’s largest economy, which grew 5.02% last year, will probably grow by 4.5%-4.9% year-on-year in the first three months of 2020 due to economic disruption caused by the virus outbreak, while strong pressure was expected in the second quarter, Minister Sri Mulyani Indrawati said.
The last time growth hovered around 4.5% was during the 2008 global financial crisis.
Economic activity had remained buoyant up to February, Indrawati said, but the detection of cases within the archipelago since the beginning of March has disrupted business activity. Authorities have sought to limit people’s mobility and curb the spread of the virus in Indonesia, which as of Wednesday had recorded 227 cases and 19 deaths.
Meanwhile, its equity index, bond prices and the rupiah have plunged amid capital outflows that the minister said amounted to around $4.3 billion in the year to March 13.
“We will not underestimate this, the impact will be significant,” Indrawati, who said she tested negative for the virus, told an online news conference.
A total of 17.17 trillion rupiah ($1.13 billion) from the 2020 state budget, initially earmarked for non-priority spending and delayed projects, will be reallocated for coronavirus response, Indrawati said.
The government’s task force for COVID-19 was also in the process of calculating how much money is needed to upgrade the capacity of hospitals and ramp up the production of face masks and other medical supplies, which will receive further support from the state budget, she said.
Authorities were also looking at ways to provide tax breaks for informal workers to complement a tax relief it already gave some workers in manufacturing, Indrawati said.
The government last week pledged to spend $8 billion to stimulate the economy and the central bank may make a second interest rate cut on Thursday.
Luky Alfirman, who heads the ministry’s financing department, said the government was sticking to its latest 2020 budget deficit forecast of 2.5% of GDP - already above the 1.8% originally planned.
However, he said the extent of 2020 bond issuance would be reduced by using 136 trillion rupiah ($8.9 billion) carryover cash from 2019 and potential loans from the Asian Development Bank and the World Bank.
$1 = 15,200 rupiah Reporting by Gayatri Suroyo, Tabita Diela, Maikel Jefriando and Fransiska Nangoy; Editing by Alex Richardson and Philippa Fletcher