Govt may issue less debt this year<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government may reduce the size of the domestic bond issue for
\nthis year due to current volatility in the financial market, says
\nMinister of Finance Boediono.<\/p>\n
Boediono stressed, however, that the move would not create
\nfinancing problems for the 2004 state budget because the
\ngovernment had extra funds, primarily from the sale of assets by
\nthe Indonesian Bank Restructuring Agency (IBRA) last year. IBRA
\nwas shut down in February this year.<\/p>\n
According to Anggito Abimanyu, a senior official at the
\nministry, the government currently has some Rp 9 trillion in
\nreserve funds, derived mainly from IBRA money.<\/p>\n
The government, via the Ministry of Finance, had planned to
\nsell treasury bonds every month this year to help finance the
\nstate budget deficit, which is estimated at Rp 24.4 trillion
\n(about US$2.60 billion), or about 1.2 percent of gross domestic
\nproduct.<\/p>\n
The government plans to issue domestic bonds worth about Rp 24
\ntrillion this year.<\/p>\n
However, on Thursday, the government canceled the bond issue
\nfor June due to the current volatility in the financial market,
\nas the rupiah has plunged and pressure for a hike in interest has
\nintensified.<\/p>\n
Last month, the government also dropped the planned sale of Rp
\n3.5 trillion-worth of 15-year bonds as investors demanded an
\noverly high yield. This was attributable to rising uncertainty in
\nthe financial market as investors started to switch to dollar-
\nbased assets, given a looming interest rate hike in the U.S.,
\nconcern at the impact of a slowdown in China, rising oil prices
\nand political uncertainty at home ahead of the July 5
\npresidential election.<\/p>\n
So far, the government has issued domestic bonds worth only Rp
\n7.5 trillion. In March, the government issued around $1 billion-
\nworth of international bonds, the first sovereign issue since the
\ncountry plunged into the 1998 regional financial crisis. The
\nissue was oversubscribed amid positive market perception about
\nthe Indonesian economy at the time, as the government seemed to
\nhave been successful in stabilizing the fiscal and monetary
\nsituation.<\/p>\n
Bank Indonesia has recommended the finance ministry proceed
\nwith the bond issue for June as current monetary conditions are
\nnot as bad as commonly perceived.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-may-issue-less-debt-this-year-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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