I think it is okay to go ahead with municipal bonds."Jakarta (ANTARA News) - Chief of the Indonesia National Development Planning Agency (Bappenas) Bambang Brodjonegoro said not all regional governments in Indonesia are qualified to issue municipal bonds due to their poor fiscal management.
"Only regions which have fiscal abilities and proper management of disbursements can issue municipal bonds. If both of them are inadequate, they will make expensive loans and repay them with cheap funds," he said here on Saturday.
He said much of the regional governments funds, which should immediately be disbursed for finance development activities, are being held at regional development banks (BPDs).
According to the Deposit Insurance Institution (LPS), as of October 2016, 60-70 percent of the regional governments funds are kept at BPDs and the rest in state-owned banks.
The amount of regional government funds kept at banks as of October 2016 reached Rp206.7 trillion, LPS said.
Bambang noted that municipal bonds may serve as an alternative to development financing, particularly in the infrastructure sector. However, regional governments should use their funds at BPDs, which are normally disbursed in the final quarter of the year.
"I think it is okay to go ahead with municipal bonds. But it will be ridiculous if regional governments, which have a great deal of idle funds, insist on issuing municipal bonds," he said.
(Reported by Citro Atmoko/S012/KR-BSR/S012)
Editor: Priyambodo RH
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