Sri Mulyani Brings Good News, Government Wants To Issue Rp8.4 Trillion Debt To Build Social Facilities

Illustration (Photo: Doc. Antara)

JAKARTA - The Ministry of Finance (Kemenkeu) reports that the government is ready to issue Sustainable Development Goals (SDG) Government Bonds (SUN) in the Euro foreign currency in the SEC-Registered Shelf Take-Down format.

It was stated that this was the first step taken by state officials with an estimated total absorption of funds of 500 million euros or equivalent to Rp8.42 trillion (exchange rate of Rp16,851).

"This transaction is the first conventional SDG bond issuance in Asia which reflects Indonesia's leadership in sustainable financing and a significant step in achieving the SDGs," the Ministry of Finance said in a press statement on Tuesday, September 14.

In detail, the RIEUR0334 series of financing instruments will take a tenor of 12 years with an estimated maturity on March 23, 2034.

The pricing determination has been carried out on September 13, 2021, and the settlement date (issuance) on September 23, 2021.

"The coupon rate given is 1.30 percent with a yield of 1.351 percent," said the Ministry of Finance.

Furthermore, in the issuance of this inaugural SDG bond, the government stated that it succeeded in reducing prices by 27 bps from the initial price guidance at the level of MS+140-145 bps to the final price guidance at the level of MS+118bps.

It is also said that this is the lowest spread against Mid-Swaps for Euro-denominated SUN with a 12-year tenor.

“The Indonesian government has compiled the SDGs Government Securities Framework (SDGs Framework) and has obtained the Second Party Opinion from CICERO and IISD. The new framework is a development of the Green Bond and Green Sukuk Framework which was published in 2018," continued the release.

The ministry led by Sri Mulyani also explained that all the proceeds from the issuance of this SDG bond were to fund projects that qualify for Eligible SDGs Expenditures in the SDGs Framework.

"The debut of the SDG bond issuance shows the government's commitment to financing social and environmental projects to realize the 2030 agenda for sustainable development. The government is determined to realize the agenda of sustainable development goals by establishing various development policies and programs to achieve the SDGs target in 2030," said the Ministry of Finance.

Just so you know, in the Working Meeting of the Budget Agency (Banggar) of the DPR RI with the government last week it was revealed that the government's debt until the closing of 2020 was Rp6,080.08 trillion.

Of this amount, the state is obliged to pay interest on debt of no less than Rp317.89 trillion last year.

The government itself assumes that the state's financial condition is still in a fairly healthy condition. This assumption is based on the mandate of Law No. 17/2003 on State Finance which mandates the ratio of government debt to a maximum of 60 percent of gross domestic product (GDP).

Meanwhile, the debt ratio in 2020 is recorded at 38.68 percent of GDP and in 2021 it is believed to be in the range of 45 percent of GDP.