The government issued four series of state bonds to Bank Indonesia (BI) with total amount of Rp46.20 trillion (US$3.1 billion) through a private placement scheme - Photo by MoF Office

JAKARTA (TheInsiderStories) – The government issued four series of state bonds to Bank Indonesia (BI) with total amount of Rp46.20 trillion (US$3.1 billion) through a private placement scheme. According to directorate general of financing and risk management at the ministry of finance, the issuance of the notes is part of burden sharing agreement between the two parties.

The total financing needs for public goods in the National Economic Recovery Program (ERP) are projected worth of Rp397.56 trillion, including financing for health spending, social protection, and sectoral financing for ministries, institutions, and local governments.

The program is a burden sharing scheme between the minister of finance as the fiscal authority and BI as the monetary authority in order to meet financing needs to accelerate the ERP due to the impact of COVID-19 outbreak. The government issued four series of bonds with the variable rate type and can be traded.

Each series offers a three-month BI reverse repo rate with a coupon of 3.84 percent, each. The four series are VR0046 due on Oct. 12, 2025, VR0047 mature on Oct. 12, 2026, VR0048 due Oct. 12, 2027, and VR0049 mature on Oct. 12, 2028. So far, the government has issued a total of Rp229.68 trillion for BI in the context of burden sharing.

This transaction based on the Joint Decree of the Minister of Finance and the Governor of Bank Indonesia number 347/KMK.08/2020 and 22/9/KEP.GBI/2020 dated July 20, 2020. It regulates the Scheme and Mechanism for the coordination of purchase of state or sharia bond by BI in the primary market and the sharing of costs for financing to handling the impact of the COVID-19 and ERP.

The first burden sharing between the two institutions on August 6. At that time, the government sold Rp82.1 trillion of variable rate noted with series VR0034, VR0035, VR0036, and VR0037. In the second phase, the government only issued Rp16.98 trillion by sold the VR0038, VR0039, VR0040, and VR0041 series.

In the third stage, the government issued Rp84.4 trillion on Sept. 24, by released VR0042 with five years terms, VR0043 for six years period, VR0044 due in seven years, and VR0045 mature in 2028).

US$1: Rp14,800

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