Burden Sharing: BI Bought Government Bond US$1.56B

JAKARTA (TheInsiderStories) - As part of burden sharing to help the economic recovery, Bank Indonesia (BI) purchased four series of government sharia bond worth of Rp22.87 trillion (US$1.56 billion). Based on the finance ministry data, the four series are VR0050, VR0051, VR0052 and VR0053, with each values Rp5.717 trillion.

The four series maturities are on the same date on Oct. 26 of 2025, 2026, 2027 and 2028, respectively. This is the fifth transaction conducted by the central bank and the government to fulfill part of the public goods financing through a private placement scheme

For public goods purposed, the bond have a coupon rate equal to the BI reverse repo rate. While, for non-public goods financing use the three-month of BI reverse repo rate minus 1 percent and for the financing of other non-public goods at the market rate.

The total needs for public goods financing is projected amounted to Rp397.56 trillion, including financing for health spending, social protection, as well as sectoral financing for ministries, institutions and regional governments in the context of handling COVID-19 and Economic Recovery Program. Until Oct. 13, BI stated that it had absorbed government bond worth of Rp291.3 trillion.

Earlier, Finance minister, Sri Mulyani Indrawati, said Indonesian government seeks funds Rp900.4 trillion from the state bond issuances to finance the 2020 State Budget deficit. Based on the new presidential decree, the country set the budget deficit Rp1,039.2 trillion or 6.34 percent of Gross Domestic Products (GDP).

According to director at the finance ministry office, Riko Amir, the debt issuance will be fulfilled in several instruments like SUKUK retail as much as Rp40 trillion, withdraw new or non-debt loans using the state treasury, issues special scheme to BI, private placement, and global bond with three types like global SUKUK, US Dollar denominations, and Samurai Bonds. For domestic market, the director general office will hold 12 auctions until the end of 2020.

End of June, Joko Widodo has signed the President Regulation Number 72 of 2020 as a revision of the Presidential Regulation Number 54 of 2020 on the revision of the 2020 State Budget. Based on the decree, the deficit widens from Rp852.9 trillion to Rp1,039.21 trillion or 6.34 percent of GDP, said the decree.

The regulation stated, the government spending will expanded to Rp2,739.16 trillion, consisting of the central government expenditure of Rp1,975.24 trillion, including the additional spending for COVID-19 responses worth of Rp358.88 trillion and transfers to regions and village funds of Rp763.92 trillion. The state revenues targets also revised from Rp1,076.9 trillion to Rp1,699.94 trillion.

The government said, the revision was made by considering changes in the economic conditions and to deal on the COVID-19 pandemic. The government hopes that the revised state budget will drive the breakthroughs and acceleration of the epidemic responses as conveyed by the head of states.

Indrawati stated, the COVID-19 costs is predicted worth of Rp677.20 trillion consisted of Rp87.55 trillion health. Then, social protection and direct aid Rp203.3 trillion. To support micro, medium, small, medium enterprises (MSMEs) and business incentives Rp120.61 trillion. For financing and corporation Rp44.57 trillion. And, for the government institution, sectoral, and regional government Rp97.11 trillion.