Wow! Bank Indonesia Buys Up To IDR 8.7 Trillion Of SBN To Help The Government Fund The State Budget

JAKARTA - Bank Indonesia (BI) reported that until March 15, 2022, it had purchased state securities (SBN) worth not less than IDR 8.76 trillion.

BI Governor Perry Warjiyo said this effort was a form of support for the government in supporting the State Revenue and Expenditure Budget (APBN).

"This is fiscal and monetary coordination as stated in the joint decision of the Minister of Finance and the Governor of Bank Indonesia which is valid until December 31, 2022," he said after the recent Board of Governors' Meeting (RDG).

According to Perry, the central bank's contribution in state financing is focused on dealing with the impact of the COVID-19 pandemic which requires large costs.

"The SBN purchases are made on the primary market in the context of financing the 2022 State Budget and supporting national economic recovery," he said.

According to VOI records, the synergy between Bank Indonesia and the government in terms of funding state finances is contained in a Joint Decree (SKB) between the Minister of Finance and the Governor of Bank Indonesia.

The SKB I took effect in 2020 with the central bank disbursing funds to the State Budget amounting to IDR 473.42 trillion. Then, continued with the SKB II for the 2021 period with a realization of around IDR 201 trillion. Then in SKB III, the monetary authority plans to purchase Government Securities worth IDR 224 trillion.

To note, the government must pay interest on SBN purchased by Bank Indonesia at the BI rate minus 1 percent for non-public goods spending. Meanwhile, 0 percent interest is charged for purchases aimed at public goods.

The current reference interest rate for Bank Indonesia is 3.5 percent with a deposit facility rate of 2.75 percent and a lending facility interest rate of 4.25 percent.