Government to resume bond issue<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government announced on Friday it would sell Rp 2 trillion-
\nworth of treasury bonds at an auction on July 27.<\/p>\n
Minister of Finance Boediono told a media conference that the
\nindicative yield for the eight-year bonds was 11 percent.<\/p>\n
The government canceled planned bond issues in May and June
\ndue to poor market conditions at a time when the rupiah was under
\nstrong pressure amid uncertainty in the run-up to the July 5
\npresidential election, and a massive investment switch by
\ninvestors to dollar-based assets ahead of a planned increase in
\nthe U.S. interest rate. The drop in the rupiah has created
\ninflationary fears, prompting bond investors to demand higher
\nyields.<\/p>\n
However, following the relatively peaceful and smooth
\nelection, and the moderate increase in U.S. rates, the rupiah has
\nrecently started to stabilize, creating more favorable conditions
\nfor issuing bonds.<\/p>\n
The government plans to issue a total of Rp 32.5 trillion-
\nworth of bonds this year to help repay a huge domestic debt that
\nresulted from the costly bank bailout program in the late 1990s.<\/p>\n
It aims to issue bonds each month. So far the government has
\nissued around Rp 16 trillion-worth of bonds.<\/p>\n
The government sold in March $1 billion in global bonds, more
\nthan double its planned $400 million offering, due to strong
\noverseas demand.<\/p>\n
Meanwhile, the International Monetary Fund said in a media
\nstatement that Indonesia was on track to meet a 4.8 percent
\neconomic growth target for this year, driven mainly by domestic
\nconsumption and improving global economic conditions.<\/p>\n
But the fund said the poor investment climate remained a
\nmatter of concern.<\/p>\n
The statement was issued following a recent visit by the IMF
\nspecial team for the postmonitoring program of the country's
\neconomy, which, late last year, marked the end of the IMF bailout
\nprogram.<\/p>\n
The fund also said that maintaining hard-won macroeconomic
\nstability should also become a priority, as inflation this year
\ncould reach 7 percent, exceeding the government's target of 6.5
\npercent, due to the recent drop in the rupiah.<\/p>\n
The local unit has so far fallen by around 6 percent this
\nyear. The weak currency makes imported raw materials more
\nexpensive.<\/p>\n
The IMF also said the financial sector had continued to
\nstrengthen and profitability in the banking sector had improved.<\/p>\n
Current account is expected to remain in surplus this year, at
\naround 2.5 percent of gross domestic product, it added.<\/p>\n
But \"going forward, further efforts will be needed, not only
\nto improve certainty in the legal system, but more broadly to
\naddress a variety of other weakness in the investment climate,\"
\nthe IMF was quoted by Dow Jones as saying.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-to-resume-bond-issue-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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