Bank Indonesia Sends A Signal That It Will Continue To Fund The State Budget Until 2022

Governor of Bank Indonesia Perry Warjiyo (left) with Minister of Finance Sri Mulyani (Photo: Doc. Antara)

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo said that the monetary authority opened the opportunity to continue the funding policy of the State Revenue and Expenditure Budget (APBN) until the 2022 period. Perry emphasized this when holding a virtual press conference in the middle of this week.

According to him, the central bank will continue to purchase Government Securities (SBN) as part of the policy synergy between Bank Indonesia and the government amid the COVID-19 pandemic.

"Of course, Bank Indonesia's participation in the APBN is possible and indeed allowed," he said at a press conference on Thursday, August 19.

Perry added that the government is currently finalizing the 2022 State Budget Bill (RUU) together with the DPR. For this reason, his party is still waiting to see how big the share of SBN purchases by BI will be next year.

"The government is in discussion with the DPR, later the Minister of Finance and I will provide an explanation regarding this," said Perry.

For information, the legal basis that paved the way for Bank Indonesia to be able to fund the APBN is stated in Law No. 2 of 2020 as a response to the pandemic situation which requires a fairly large handling budget.

As of August 16, 2021, the purchase of SBN by BI in the primary market was recorded at Rp131.96 trillion, consisting of Rp56.50 trillion through the main auction mechanism and Rp75.46 trillion through the Greenshoe Option (GSO) mechanism.

According to VOI records, this number has increased compared to the recapitulation on July 19, 2021, which was recorded at Rp124.13 trillion. Of this rate, Rp48.67 trillion of which was purchased through the main auction mechanism. Meanwhile, Rp75.46 trillion through GSO.

Meanwhile, in the 2022 State Budget Draft, it is stated that state spending will reach Rp2,708.7 trillion. Meanwhile, next year's state revenue is projected to reach Rp1,840.7 trillion.

That means the budget deficit will touch Rp868 trillion or 4.85 percent of (gross domestic product (GDP).