Bank Indonesia can buy government bond up to 25 percent on the primary market not later than next week, said the governor last week - Photo by BI Office

JAKARTA (TheInsiderStories) – Indonesian central bank (BI) can buy government bond up to 25 percent of the total issuances on the primary market not later than next week, said the governor on Friday (04/17). As regulated in government regulation lieu of law Number 1 of 2020 concerning State Financial Policy and Financial System Stability, the Bank could buy the state bond from the primary market.

“If its ready, start next week or the following week, we could buy the notes from the primary market,” the governor, Perry Warjiyo told reporters via video conference.

The law stated, BI is allowed to finance the deficit of the State Budget through the purchase of government bond and the Sharia bond as last resort if the market is unable to absorb. As know, the government has widened the 2020 budget deficit from 2.5 percent to 5.07 percent of gross domestic products (GDP).

The expanded deficit to curb the country’ economy from the impact of COVID-19. The government needs spending worth of Rp405.1 trillion to run the program.  In details, Rp75 trillion will distributes for health spending, like purchase of personal protective equipment, test kits, referral hospitals, incentives for doctors, other medical workers, ventilators and death insurances. 

Then Rp110 trillion for social protection like poverty alleviation program for 10 million beneficiaries, cards groceries 20 million families, pre-work cards for 2.6 million recipients, exemption from electricity costs for three months period, basic food and logistical support.

In addition, Rp70.1 trillion for tax and stimulus incentives. While, Rp150 trillion for fan economic recovery program, including credit restructuring, guarantees and financing of the business world for six months.

For the non-fiscal sector in ensuring the availability of goods, including industrial raw materials, the government applies a simplified export ban, simplification of a limited import ban, the acceleration of services in the import-export process through the national logistics ecosystem.

In total the government spending in 2020 will rises form initial plans Rp2,540.4 trillion to Rp2,945.5 trillion (US$190.03 billion). While the revenues its expecting lowers then initial target Rp2,233.2 trillion.

US$1: Rp15,500

Written by Staff Editor, Email: theinsiderstories@gmail.com