Australia is providing a $1.5 billion loan to Indonesia in support of an international COVID-19 response program.
The loan, repayable over 15 years, will be used to support Indonesia's budget financing for 2020.
The agreement recognises the comprehensive strategic partnership between the two countries, while supporting the Asian Development Bank-led COVID-19 response and expenditure support program.
In a joint statement, Australian Treasurer Josh Frydenberg and Indonesian Finance Minister Sri Mulyani Indrawati said COVID-19 was posing an unprecedented challenge to the Indo-Pacific and the world.
"Both our nations have been affected by this extraordinary crisis as containment measures and uncertainty have depressed global economic activity and international trade," they said.
"The provision of the Australian Government loan to Indonesia reflects the extraordinary times which we all must face together and is in recognition of Indonesia's record of sound fiscal management which has allowed the government to respond to COVID-19 health crisis."
Indonesia's recovery and ongoing prosperity is also critical to the stability and security of the region, they said.