Investors still interested in government`s bonds: ministry

Investors still interested in government`s bonds: ministry

Luky Alfirman (left), Director General of Financing and Risk Management at the Ministry of Finance. (ANTARA FOTO/Sigid Kurniawan)

Jakarta (ANTARA News) - The Ministry of Finance has ensured that investors in Government Securities (SBN) are still interested in Indonesian government bonds, although there is currently global pressure triggered by the weakening of the Turkish Lira currency.

Luky Alfirman, Director General of Financing and Risk Management at the Ministry of Finance, at a press conference on the latest state budget developments in Jakarta on Tuesday, said that this was evident from the high bids that were included in the routine Government State Debentures (SUN) auction on Tuesday.

"Amid market doubts due to escalating developments in Turkey, our auction exceeded the target of Rp10 trillion, with an incoming bid of Rp34 trillion and we won Rp16.5 trillion," Luky said.

Luky said that the high absorption of funds from the auction of these six scheduled SUN series showed the trust of investors in Indonesia`s economic fundamentals.

For this reason, even though global uncertainty is expected to continue in the second half of 2018, the government is still carrying out financing plans through loan withdrawals and SBN issuance.

"We have obtained a commitment of US$2.5 billion which can be disbursed this year and in the future, then the private placement mechanism is not through auction, and we optimize our auction as today," Luky said.

Luky also ensured the issuance of retail bonds to deepen domestic markets such as Retail Saving Bonds (SBR 004), Retail Government Bonds (ORI015) and savings sukuk in the second semester of 2018.

On this occasion, the Ministry of Finance noted that the realization of debt financing until the end of July 2018 had reached Rp205.57 trillion from the Rp399.22 trillion target set in the APBN (state budget) or 51.49 percent.

When compared with the same period in 2017, the realization of this debt financing experienced a negative growth of 30.64 percent.

The realization of debt financing, which is reflected in SBN issuance, has always declined since 2016 because it is in line with efforts to reduce debt costs, the management of cash management and consideration of financial market volatility.

Meanwhile, the ratio of government debt at the end of July 2018 was recorded at 29.7 percent of GDP, with an outstanding reaching Rp4,253.02 trillion, or still below the permissible limit in the Law of 60 percent of GDP.

The debt composition consists of 18.33 percent loans and SBN issuance, including SUN and sukuk, at 81.35 percent. *** 3 ***

Reporting by By Satyagraha
Editing by Andi Abdussalam