Sri Mulyani makes Indonesia less dependent on foreigners
The Ministry of Finance (Kemenkeu) continues to try to reduce the share of foreigners in the ownership of Indonesian debt securities.
This was conveyed by the Director-General of Financing and Risk of the Ministry of Finance, Lucky Alfirman. He said, currently the proportion of foreign ownership continues to decline, in 2020 it will decrease to 25%, and in 2021 it will decrease to 19.3%. In fact, before the pandemic, the share of Indonesian SBN ownership by foreigners reached more than 38%-39%.
"This means that we reduce foreign dependence and vulnerability," said Lucky in the Launching and Opening Period of the ORI021 Series Retail Government Bonds, Monday (24/1/2022).
With a decrease in the foreign portion, it means that the government is no longer worried if there is turmoil in global financial markets so that the rupiah exchange rate remains strong under any conditions.
Lucky added, the key to escape from foreign dependence is to strengthen the domestic investor base, including retail or individual ones. To that end, the government continues to explore domestic investors through the issuance of retail SBN.
Recently, the government through the Ministry of Finance's DJPPR finally officially launched the Retail State Bond or ORI021 on Monday (24/1/2022).
The purpose of the launch of ORI21 is to strengthen the base of domestic investors, including retail or individual ones, as well as reduce dependence from outside (foreigners).
"In terms of potential, we have used SID to purchase our SBN. Currently, our number of investors is 550 thousand investors. SID registered in the capital market has reached 7.5 million. This is a very big opportunity," concluded Lucky.
RI's Secret Surviving New Debt of IDR 310 T, the Government through the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance (Kemenkeu) succeeded in reducing additional debt in 2021. The value was not small, reaching IDR 310 trillion. Director-General of PPR of the Ministry of Finance, Lucky Alfirman explained in In the 2021 state budget, the target for budget financing is Rp. 1,006,4 trillion, and the realization is 86.3% of the target, which is Rp. 868.6 trillion. Specifically for net debt financing, the realization was Rp. 867.4 trillion, or Rp. 310 trillion, lower than the target.
This is due to the high income from taxes, customs, and non-tax state revenues. The three elements, he said, exceeded the target by 103%. It was recorded that the surplus in revenues reached a total of Rp. 259 trillion.
"In terms of spending, the government has carried out various programs reaching 101%. The overall deficit is still, but we can still reduce it, originally in the APBN it was only 5.7% of GDP, but the realization was only 4.56% of GDP, so there was a decrease of Rp. 222 T, " said Lucky in the Launching and Opening Period of the Retail Government Bond Series ORI021.
The government also optimizes SAL by Rp 144 T. On the other hand, there is assistance from Bank Indonesia (BI) through a Joint Decree (SKB), in which BI buys SBN and bears part of the interest. "So we can reduce our debt by Rp 310 T compared to the target," said Lucky.
Sri Mulyani Removes Foreigners from Indonesian Debt Instruments, the Ministry of Finance, led by Sri Mulyani Indrawati, continues to strive to reduce the foreign portion of Indonesian debt securities ownership. This is good for Indonesia's resilience in the future in the face of financial market turmoil.
"That is indeed the government's strategy on how to reduce our dependence in foreign currency," said Director General of Financing and Risk Management (DJPPR) Lucky Alfirman at a press conference, Monday (12/13/2021). (SBN) decreased gradually. Until early December 2021, the foreign portion was below 20%. The foreign portion was taken by domestic banks which experienced an increase to 25.91% as of December 9, 2021.
In addition to banking, there is Bank Indonesia (BI) as well as insurance and pension funds which also increase the portion of debt securities ownership. "Before the pandemic, foreign ownership was 40 percent and 41 percent, and today it's only under 20 percent," he said.
With the decrease in the foreign share, it means that the government is no longer worried if there is turmoil in global financial markets. Usually, when there is turmoil from anywhere in the world, Indonesia is always affected. Capital flows out and makes the rupiah exchange rate weaken.
"So if we reduce the dollar, we reduce our exposure to currency risk. In the future we want to reduce currency risk," explained Lucky.
Currency risk is one of the determining indicators for SBN yields. Now the position of SBN yield is around 6%. It is still very high compared to the US Treasury yield, while inflation in Indonesia is very low. A decrease in yield means that the interest on debt charged to the government is also lower.
"That's why we want domestic support for our SBN," he concluded. Meanwhile, RI's New Treasures Emerge, Debt of Rp. 6,900 T Can Be Paid Off? The government has discovered a series of treasures in recent times. If it is optimized properly, of course, this can have a positive impact