Govt plans to issue short-term bonds<\/p>\n
JAKARTA (JP): The government plans to issue six to 12-month
\nbonds in April this year to replace part of the outstanding
\ngovernment bank recapitalization bonds, according to director
\ngeneral of financial institutions Darmin Nasution.<\/p>\n
Darmin said on Thursday the measure would ease the pressure on
\nthe state budget when the majority of the outstanding government
\nbonds mature in 2004.<\/p>\n
\"The objective of the issuance of the short-term bonds is to
\nrestructure the maturity period of the long-term government
\nbonds ... so that the state budget will not be in a difficult
\nposition,\" he told reporters on the sidelines of a meeting with
\nthe House of Representatives.<\/p>\n
Darmin said the government had yet to discuss with Bank
\nIndonesia the size of the planned bonds issue.<\/p>\n
The government has issued around Rp 430 trillion (US$46
\nbillion) worth of bonds to help finance the recapitalization of
\nthe country's ailing banking sector.<\/p>\n
Economists have warned that the government must be able to
\nretire part of its outstanding bonds within the next two years to
\navoid risking another economic crisis.<\/p>\n
They pointed out that in 2004, more than Rp 70 trillion of the
\nbonds would mature and become unbearable for the state budget.
\nThe burden will be even heavier as some of the loans owed to the
\nInternational Monetary Fund will also mature at the same time.<\/p>\n
Experts have said that Indonesia might not obtain another debt
\nrescheduling from its traditional creditor countries amid rising
\noil prices and the expected slower economic growth of the
\ndeveloped nations.<\/p>\n
Darmin said the government would propose a draft law on bonds
\nto the House of Representatives next month.<\/p>\n
He said the law would become a legal basis for the government
\nto issue bonds in the future.<\/p>\n
He said the draft law was expected to be approved by the House
\nin March, before the issuance of the short-term treasury bonds.<\/p>\n
\"The law will ensure that the government does not default on
\nits bond payment,\" Darmin said.<\/p>\n
The government is also preparing various measures to help
\nactivate the trading of government bonds in the secondary market.<\/p>\n
The finance ministry plans to issue a new ruling to allow
\npension funds to invest up to 100 percent of their money in
\ngovernment bonds.<\/p>\n
Currently, investment in a single bonds issue by pension funds
\nis limited to 20 percent.<\/p>\n
Darmin said his office was also in discussion with the tax
\noffice over the controversial 0.03 percent transaction tax on
\ngovernment bonds.<\/p>\n
He declined to say whether the tax would be dropped, but
\nadmitted that the administration of the transaction tax would be
\nvery difficult to do once the secondary market became more
\nactive.<\/p>\n
Market players have called on the government to drop the
\ntransaction tax to make the secondary market more active.<\/p>\n
Separately, Darmin said the government would propose, to the
\nlegislature in June, a bill for the establishment of a financial
\ninstitutions supervisory agency.<\/p>\n
He said the independent supervisory agency would oversee the
\ncountry's banking sector, capital market, insurance, pension
\nfunds and leasing companies.<\/p>\n
He said the government hoped the new agency, which would take
\nover Bank Indonesia's banking supervisory tasks, could be formed
\nsometime in 2002.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-plans-to-issue-short-term-bonds-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}