Economist: BSF should serve as short-term stabilisation buffer

Jakarta (ANTARA) - Head of the Macroeconomics and Finance Centre at Indef, M. Rizal Taufikurahman, believes that the government’s reactivation of the Bond Stabilisation Fund (BSF) should be positioned as a short-term stabilisation buffer to maintain stability in the yields of Government Securities (SBN). He warns that the effectiveness of the BSF will be limited if the pressure stems from fundamental factors. If the fiscal deficit widens, debt interest burdens increase, the rupiah continues to weaken, or investor confidence declines, the BSF will not be strong enough to withstand market pressures. “Because ultimately, investors still look at fiscal credibility, economic stability, and the direction of government policy,” Rizal said when contacted by ANTARA in Jakarta on Friday. Rizal also warns of the risks of moral hazard and market distortions that need to be guarded against so that investors do not become dependent on government interventions. “The main foundation remains strengthening fiscal positions, maintaining rupiah stability, and deepening the financial market and domestic investor base,” he said. Nevertheless, Rizal views the establishment of the BSF as quite relevant amid the current financial market pressures. The rupiah exchange rate has weakened to around Rp17,400 per US dollar, while the yield on 10-year SBN has moved in the range of 6.7-7 percent. On the other hand, foreign ownership of SBN has fallen to around 12.7 percent as of April 2026, much lower than several years ago when it was above 30 percent. This condition makes the domestic bond market more sensitive to capital outflows and global turbulence. Rizal explains that the BSF can serve as a shock absorber when there is excessive selling pressure in the SBN market. This instrument helps ensure that yield spikes are not too extreme, thus keeping government debt costs under control. “Even until April 2026, Bank Indonesia has recorded purchases of SBN amounting to around Rp111.5 trillion to maintain market and rupiah stability, so the need for additional stabilisation instruments is indeed becoming apparent,” Rizal said. Contacted separately, Global Markets Economist at Maybank Indonesia, Myrdal Gunarto, also views the establishment of the BSF as a positive step to maintain stability in the state debt market, especially during turbulent financial market conditions and when Bank Indonesia’s (BI) intervention capacity is limited. “If it’s for this BSF, it’s fine in my opinion. It can be a solution. So it’s not just BI that seems to be intervening actively all the time,” Myrdal said. He assesses that the BSF is effective when used during strong turbulence in the financial markets, allowing the government to minimise the impact of investor selling actions in the bond market and maintain SBN yield stability. However, Myrdal warns that the effectiveness of the BSF greatly depends on the government’s fiscal capacity and the availability of funds, both from the budget surplus (SAL) and other sources. If market pressure is high while the BSF fund allocation is limited, the intervention is deemed at risk of being suboptimal. According to him, the government needs to ensure that fiscal capacity remains maintained so that the BSF initiative does not burden the state finances. He also emphasises the importance of coordination between the government, BI, and other authorities in the Financial System Stability Committee (KSSK) in implementing the BSF. Finance Minister Purbaya Yudhi Sadewa plans to activate the Bond Stabilisation Fund to keep the state debt market stable and not easily swayed by foreign investors. This step is also expected to prevent turbulence in the domestic financial market and help maintain rupiah exchange rate stability. The funds are prepared to stabilise the state debt market by buying back (buyback) SBN in the secondary market released by investors. This strategy is carried out to keep SBN yields stable, so foreign investors holding state debt do not suffer capital losses. Purbaya also mentioned that the Bond Stabilisation Fund could involve funding sources from institutions under the Ministry of Finance, including special mission vehicles (SMV). “If it’s a real fund, the old design involved several institutions, including the Ministry of Finance and all SMVs under the Ministry of Finance, which can help when we stabilise bond prices. That’s the main point. So, not just SAL,” Purbaya said during a KSSK press conference in Jakarta on Thursday (7/5).