Pramono chooses 7-year tenor for Rp3.5 trillion bonds, focuses on financing long-term projects 

JAKARTA - The DKI Jakarta Provincial Government (Pemprov) has set a minimum tenor of seven years for regional bonds worth Rp3.5 trillion which will be issued as a creative financing scheme.

The time frame was chosen so that the financing of infrastructure projects would not burden the regional finances in the short term while maintaining the health of the APBD.

DKI Jakarta Governor Pramono Anung said the issuance of bonds was one of the steps taken by the DKI Provincial Government after the reduction of revenue funds from the central government. According to him, the financing scheme was designed so that Jakarta's financial condition remained healthy and managed transparently.

"Even though there is a cut in revenue sharing funds, we are doing creative financing so that Jakarta's finances are much healthier. And transparent and open, so why is the tenor at least seven years," said Pramono at the DKI Jakarta City Hall, Wednesday, July 22.

Pramono ensured that Jakarta's fiscal capacity was sufficient to meet all obligations for the payment of the bonds. In fact, he assessed that the issuance of bonds would actually strengthen the management of the APBD in the future.

"Jakarta is definitely capable and Jakarta will definitely have this bond, with this creative financing, the APBD will become healthier and hopefully more beneficial for the community," he said.

The proceeds from the issuance of bonds will be focused on financing public service projects that have long-term benefits. Among them are the construction of the Manggarai-Dukuh Atas LRT route, regional general hospitals (RSUD), school units, ponds, polders, and other public infrastructure.

"The value is IDR 3.5 trillion, its use for things that are fundamental and long-term for the public interest. Among them are public service projects such as the Manggarai-Dukuh Atas LRT, then the RSUD, school units, ponds, polders, and so on," said Pramono.

According to Pramono, the issuance of this regional bond is the first to be carried out in Indonesia. Therefore, its issuance value is relatively small compared to the DKI Jakarta Regional Budget capacity which reaches around Rp. 81 trillion as an initial step to test the effectiveness of this financing instrument.

"This is the first time that regional bonds have been launched in this Republic. If this is successful and then becomes a creative financing instrument, I believe this can be emulated in other regions," he said.