Indonesia to boost social, health spending amid virus battle

  • Most Delta variant outbreaks on Java island - minister
  • Emergency restrictions imposed from Saturday
  • Curbs may pose risks to recovery -finance minister
  • Indonesia approves Moderna vaccine

JAKARTA, July 2 (Reuters) - Indonesia will increase social assistance and healthcare spending in response to a spike in COVID-19 cases and to soften the economic blow of tougher restrictions taking effect this week, its finance minister said on Friday.

Battling one of the Asia's worst coronavirus outbreaks, the world's fourth most populous country has seen record new infections on eight of the past 12 days, including 25,830 on Friday, and a record 539 deaths.

"Emergency" curbs will be imposed from Saturday, including tighter restrictions on movement and air travel, a ban on restaurant dining and the closure of non-essential offices.

"There is a potential for the economic outlook to weaken in the third quarter due to the mobility restrictions," Finance Minister Sri Mulyani Indrawati told a news conference, adding the impact would depend on how long they last.

Southeast Asia's biggest economy suffered its first recession in more than two decades last year due to the pandemic, but Sri Mulyani said a recovery had been gaining momentum prior to the latest flare-up.

The economy likely grew for the first time in over a year in the April-June quarter and the government before the curbs were announced had expected 6.5% growth in the third quarter.

The highly transmissible Delta variant that caused a spike in cases in India, where it was first identified, is spreading in Indonesia and pushing hospitals across the most populous island Java to the brink.

Health Minister Budi Gunadi Sadikin on Friday said Delta variant outbreaks happen primarily on Java.

That includes the capital Jakarta, where some emergency wards have been moved to tents in hospital car parks, with a surge in COVID-19 patients stretching medical care capacity.

Sri Mulyani said 126.79 trillion rupiah ($8.72 billion) of social assistance would be provided to help tens of millions of households, through cash transfers, electricity discounts and by accelerating food aid programmes.

Healthcare spending will rise 8% to 186 trillion rupiah, including on adding more staff for vaccinations and COVID-19 treatment, she said.

The government has pledged to boost testing and speed up vaccinations, with just 7.5% of the targeted 181.5 million fully vaccinated.

Indonesia has relied mainly on the Sinovac (SVA.O) vaccine, but authorities are looking to diversify sources. Budi said the Pfizer (PFE.N)-BioNTech (22UAy.DE) mRNA vaccine could be administered to those under 18, when delivered in August.

He also said Indonesia was committed to invest in producing mRNA vaccines locally.

The food and drug agency on Friday approved the Moderna (MRNA.O) mRNA vaccine, ahead of the arrival of four million doses via the international COVAX scheme. read more

The Netherlands will also donate three million doses of COVID-19 vaccine, Indonesia's Foreign Minister Retno Marsudi said.

($1 = 14,540.0000 rupiah)

Additional reporting by Stanley Widianto, Tom Allard, and Agustinus Beo Da Costa; Editing by Ed Davies, Martin Petty

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