DEFICIT FINANCING ON TRACK
Less than three quarters into the year, Indonesian government has succeeded in financing 80 percent of its targeted budget deficit for 2009, after its sixth retail bond offering sold well on 20 October 2009.
The Finance Ministry’s director general of debt management, Rahmat Waluyanto said that including ORI006, the government’s latest domestic bond offering for retail investors – which reached Rp 8.54 trillion (US$861.1 million). The government has so far managed to sell Rp 119.37 trillion worth of bonds this year, out of the Rp 144.5 trillion it had targeted to sell. The government has so far managed to finance 82.58 percent of its targeted budget deficit.
The government still have about Rp 25 trillion to cover, which will come from the domestic issuance of government bonds and bills, as well as sharia bonds.
In the revised 2009 state budget, the government estimated it would run a state budget deficit of Rp 133 trillion.
The government plans to sell Rp 1 trillion of sharia bonds or sukuk next month through an auction.
With only Rp 25 trillion of bonds left to be issued in more than four months until the year-end, the government could issue bonds with lower yields. The government can control the market and this is good for the government’s debt management.
Usually the market can “corner” the government at the end of the year if the government still has a large deficit to be plugged.
