Debate on new bond bill kicks off<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government and the House of Representatives started
\ndiscussions on Monday on the new draft law on bonds that is
\nintended to provide a strong legal basis for the government to
\nissue new bonds to help out the country's banking sector.<\/p>\n
The discussions, which will involve the Ministry of Finance
\nand the House's Commission IX for financial affairs and the state
\nbudget, are expected to be completed during the current House
\nsession which ends on March 28, Minister of Finance Boediono
\nsaid.<\/p>\n
The passage of the law on time would give the government the
\nlegal basis for refinancing Rp 3.9 trillion (some US$380 million)
\nworth of bonds set to mature in July, he said.<\/p>\n
Refinancing old bonds means issuing new bonds to cover the
\nredemption of the maturing ones.<\/p>\n
At the meeting, it was revealed that all the factions on the
\ncommission had expressed concerns over the huge pressures that
\nthe state budget had to bear each year just to repay the interest
\non government bonds.<\/p>\n
This year, the state budget has had to allocate Rp 59.2
\ntrillion for interest payments alone, with most of the money
\ngoing to the local banks the government bailed out at the height
\nof the financial crisis in 1998.<\/p>\n
More than Rp 600 trillion worth of bonds were issued by the
\ngovernment at that time to avoid the total collapse of the
\ncountry's banking sector.<\/p>\n
To date, however, the banks have not managed to fully recover
\nand are still heavily reliant on revenue from government bonds.<\/p>\n
With the slow recovery in the banking sector, the government's
\nability to manage its domestic debts is essential so as not to
\nput more strain on the budget.<\/p>\n
The debate is expected to continue today with the House
\nscheduled to listen to the opinion of the central bank.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/debate-on-new-bond-bill-kicks-off-1447893297",
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