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Saturday, 17 Nov 2018

Reasons why government added debts to cover deficit budget

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News24xx.com - The total debt that the government has made to cover the existing budget deficit until the end of August 2018 was IDR 150 trillion from the target of around IDR 325 trillion.

 

This is done by the government to save the state budget deficit in 2018 which was carried out in August, concerning the issuance of SBN (state securities) which was sold at IDR 212 trillion.

 

Reporting from Kompas.com, there is another sector that the government is also doing to cover other financing sector. That is as follows:

 

 

1. Covering Deficit with Debt

The Ministry of Finance through the Directorate General of Financing and Risk Management (DJPPR) will continue to take financing to meet the budget deficit target of 2.19 percent or equivalent to IDR 325.9 trillion.

 

The Strategy and Financing Portfolio Director, Sceneider Siahaan said the government would still cover the remaining 2018 APBN budget deficit according to the target set. "Yes, we will fulfill the deficit target until the end of the year. The government will fulfill the budget deficit financing this year for the remaining amount of the deficit needed," Sceneider said in Jakarta on Wednesday, September 12th 2018, quoted from detikfinance.

 

The Ministry of Finance has reported that the budget deficit that has been met by the government reached IDR 150 trillion or 1.02 percent of the target set. That is the sign, there is still around IDR 175 trillion for the government to meet the budget deficit in 2018.

 

Sceneider said financing was carried out with SBN issuance to be carried out during semester II of 2018 of approximately 212 trillion, with allotments meeting budget deficits and other financing such as state capital participation (PMN). And the APBN budget budget deficit target of 2018 will be smaller than the target.

 

 

2. Issue IDR 212 Trillion of SBN

The Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance said that during the second semester of 2018, it would issue state securities (SBN) of around IDR 212 trillion.

 

The Director of Strategy and Financing Portfolio Scenaider Siahaan said the issuance of SBN was to cover the budget deficit and financing of other sectors. "To finance the state budget deficit this year" said Scenaider in Jakarta, Wednesday, September 12th 2018.

 

Scenaider said that the SBN issuance of around IDR 212 trillion was, among other things, to fulfill the state capital participation (PMN) which is usually used as an injection of capital from the government for SOEs.

 

"The issuance of SBN is not only for deficits, but also for refinancing and for financing, including PMN, so approximately IDR 212 trillion will be up to the end of this year" he said.

 

 

3. IDR 212 Trillion of SBN in Rupiah

The Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance said that in the second semester of 2018 this would issue state securities (SBN) in rupiah denomination of around IDR 212 trillion.

 

The Director of Strategy and Financing Portfolio Scenaider Siahaan said the issuance of SBN in order to cover the remaining 2018 APBN budget deficit.

 

"The issuance of foreign exchange SBN until the end of the year doesn't seem to be there anymore, because everything is in rupiah SBN" Scenaider said

 

Meanwhile, Scenaider continued to meet the budget deficit by issuing SBN which was also intended to fulfill other financing such as state capital participation (PMN).

 

"The financing strategy until the end of the year will focus on deepening the domestic market through rupiah SBN issuance targeted at retail investors, private placements with domestic institutions and regular auctions to meet the budget target for this year's budget," he said.

 

 

4. Reasons for the Government to Issue SBN in Rupiah

The Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance revealed that it needed a special strategy in issuing state securities (SBN) in the midst of the dynamics of the weakening of the rupiah against the US dollar (US).

 

The Sceneider Siahaan Strategy and Financing Portfolio Director said the challenge was the concern of foreign investors to government instruments.

 

"The challenge is in the market / investor condition which is still affected by the exchange rate fluctuations caused by CAD and trade war," Scenaider said.

 

"Therefore, the government through DJPPR will issue SBN of around Rp. 212 trillion in denominations of garuda currency until the end of 2018. This is because domestic investors are more resilient to Indonesia than foreign investors at this time," he said.

 

 

 

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