Sharing Jokowi's Burdens In Economic Recovery From The COVID-19 Problem

President of the Republic of Indonesia, Joko Widodo. (Photo: Twitter @jokowi)

JAKARTA - Bank Indonesia (BI) and the Ministry of Finance (Kemenkeu) are finalizing a joint agreement related to meeting the funding needs of the State Budget (APBN). This is to strengthen cooperation in the context of burden sharing or for the burden of funding the State Budget.

This step is in accordance with the direction of President Joko Widodo (Jokowi), who asked that the concept of sharing the burden should become a common reference between the government, BI, OJK, banks and business actors in carrying out economic recovery from the COVID-19 problem.

BI Governor Perry Warjiyo said the burden of the government's APBN deficit was widening along with the large costs of handling COVID-19 and post-war economic recovery. Most of the deficit in state finances will be financed from the issuance of Government Securities (SBN).

"We together with Mrs. Minister of Finance (Sri Mulyani) how can Bank Indonesia be 'burden sharing' to reduce the burden of this SBN. In due course we will communicate it in the form of a collective agreement which we are finalizing," he said in a virtual press conference, Wednesday. , June 3.

Perry explained that Bank Indonesia can buy SBN in the primary market as the last resort or buy SBN issued by the government if it does not reach the target. BI's role in the primary market is stated in Government Regulation in Lieu of Law number 1 of 2020.

Furthermore, Perry admitted that he is optimistic that this strengthening of cooperation can increase investor confidence in the issuance of government debt securities. So it is hoped that later the burden of the state budget deficit and national economic recovery will be increasingly supported by the market.

According to Perry, since the April 21 auction, BI has purchased around IDR 26 trillion in SBN in the primary market. He claims BI's absorption rate at each SBN auction on the primary market continues to decline. This means that the market absorption capacity of SBN is getting bigger.

"If we look at the number of SBN purchases purchased by Bank Indonesia from the primary market getting smaller and smaller, the market's absorption capacity is getting bigger, and the yield (yield) of the SBN has also decreased from 8.08 percent to 7.2 percent. This indicates that Investor confidence is getting bigger and more and more foreign investors are buying SBN at the initial auction, "he said.

Previously, Sri Mulyani said that the 2020 state budget deficit would increase to IDR 1,039.2 trillion. That figure is equal to 6.34 percent of gross domestic product or GDP. The deficit figure is greater than the APBN deficit target stipulated in Presidential Regulation Number 54 of 2020 which is 5.07 percent or IDR 852.9 trillion.

According to Sri Mulyani, the soaring deficit was in order to overcome and encourage the economy to survive the pressure of COVID-19.