Finance minister, Sri Mulyani Indrawati, regulated the new loan schemes for Indonesia Deposit Insurance (IDI) to handle the bank systemic during the crisis - Photo: Special

JAKARTA (TheInsiderStories) – Finance minister, Sri Mulyani Indrawati, regulated the new loan schemes for Indonesia Deposit Insurance (IDI) to handle the failure bank during the crisis. In accordance with Government Regulation in Lieu of Law Number 1 of 2020, the ministry is given the authority to give loans to the agency if experiences liquidity difficulties to deal with failure banks.

As regulated on the minister of finance rule Number 38 of 2020, the government could allocated loans to the agency from the Government Investment Management Agency or additional new allocations at the state budget.

If a new allocation is needed, the minister of finance will determine the sources of budget financing that need to be used to finance the additional allocation. Through the ministerial decree, if the IDI liquidity cannot be met through the release of state bond, then the agency could submits a loan to the ministry.

The loan application must contain information on the liquidity conditions, IDI efforts to meet the liquidity needs, estimated liquidity values, collateral data, how to withdraw the loans, and audited financial statements audited by the Auditor Board for the last three years.

The request will be assessed by the fiscal policy office by taking into account the level and liquidity requirements of the IDI, the ability to repay, the fiscal capacity, and the sustainability of the state budget. The funds will be allocated in the revised state budget or state budget and followed by an agreement between the minister of finance and the chairman of the agency.

The government loans and the state budget is calculated after deducting the imposition of income tax and the ministry can also ask for other guarantees. In additon, IDI cannot sell or re-guarantee the state bonds and other funds to other parties as long as the two assets are still guaranteed.

The revolving loan will be denominated in Rupiah with an interest rate that refers to several aspects. If loans originate from excess budget or bond issuance, the interest rates are equivalent to government bond yields and spreads to the nearest tenor.

If the source of the loan comes from budget surplus and debt issuance at once, then the interest rate is calculated weightedly.

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