Indonesia Concerned about Foreign Ownership of Government Bonds
The government of Indonesia has expressed its concern about rising foreign debt. Indonesian President Joko Widodo summoned Chief Economics Minister Darmin Nasution for a meeting to express his concern about the issue. In particular the high degree of foreign ownership of Indonesian securities needs attention as foreign ownership of government bonds has reached a new record high. Therefore, analysts say Indonesia needs to optimize government revenue (for example by reforming the nation's tax system) rather than depend on loans and bonds.
According to the latest data from the Finance Ministry's Financing and Risk Management Office (DJPPR), foreign ownership of government securities has risen rapidly so far in 2016. In late-April 2016 foreign ownership of government securities stood at IDR 624.95 trillion (approx. USD $47 billion) - equivalent to 38.8 percent of total issued government securities - a new record high. Most of foreign funds flow into the government bonds (SUN), which currently offer an attractive yield around 8 percent. The problem is, however, that when foreigners own a high degree of the nation's securities, it makes Indonesia vulnerable to sudden capital outflows in case of global shocks.
Indonesian's government securities (Surat Berharga Negara, or SBN) consist of government bonds (Surat Utang Negara, SUN) and Sharia government bonds (Surat Berharga Syariah Negara, SBSN).
Chief Economics Minister Darmin Nasution said he is concerned about the government's rising burden with the coupon rate around 8 percent. However, he added that the government - at this point - is not considering to cut its planned bond issuances. In the first four months of 2016 the government sold IDR 293.08 trillion (approx. USD $22.2 billion) of government securities, or 52.7 percent of the full-year target (IDR 556.06 trillion) set in the 2016 State Budget.
Indonesia's debt-to-GDP ratio is currently at the safe level of 27 percent.
Indonesia's Government Securities January-April 2016:
|Fixed Rate Bonds||IDR 96.04 trillion|
|Treasury bills (SPN)||IDR 21.40 trillion|
|private placement||IDR 17.11 trillion|
||IDR 134.55 trillion|
|Auctions||IDR 42.48 trillion|
|Sukuk Negara Ritel (SR008)||IDR 31.50 trillion|
|Private Placement||IDR 2.50 trillion|
|Islamic Bonds (Sukuk Negara)
||IDR 76.48 trillion|
Indonesia's Foreign Debt - 2016:
|2016|| Public Debt
||Private Debt||Total Debt|
|January||$143.4 billion||$164.6 billion||$308.0 billion|
|February||$146.9 billion||$164.6 billion||$311.5 billion|
Indonesia's Foreign Debt - 2015:
|2015|| Public Debt
||Private Debt||Total Debt|
|January||$135.7 billion||$162.9 billion||$298.6 billion|
|February||$134.8 billion||$164.1 billion||$298.9 billion|
|March||$132.8 billion||$165.3 billion||$298.1 billion|
|April||$132.9 billion||$167.2 billion||$300.1 billion|
|May||$133.5 billion||$168.7 billion||$302.3 billion|
|June||$134.6 billion||$169.7 billion||$304.3 billion|
|July||$134.5 billion||$169.2 billion||$303.7 billion|
|August||$134.0 billion||$169.3 billion||$303.2 billion|
|September||$134.2 billion||$168.2 billion||$302.4 billion|
|October||$136.6 billion||$167.5 billion||$304.1 billion|
|November||$137.7 billion||$166.8 billion||$304.6 billion|
|December||$143.0 billion||$167.7 billion||$310.7 billion|
Source: Bank Indonesia
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The government should thnk God that foreign countries wanted to buy Indonesian bonds. The foreign countries are helping Indonesia if Indonesia uses the money wisely.