Government And BI Will Manage Debt Due To Postponement In 2025 Carefully

Illustration (Photo: Doc. ANTARA)

JAKARTA - Bank Indonesia (BI) and the Ministry of Finance (Kemenkeu) have agreed that the issuance of SBN by the government and the purchase of SBN from the secondary market by Bank Indonesia will be carried out based on prudent principles of fiscal and monetary policy and maintain market discipline and integrity.

Executive Director of the Communication Department of Bank Indonesia, Ramdan Denny Prakoso, said that the purchase of SBN from the secondary market by Bank Indonesia will be carried out from market players and through a bilateral SBN (bilateral debt switch) exchange mechanism with the government.

"The main strategy applied is the bilateral debt switch mechanism, namely the SBN exchange which is due to regular SBN which can be traded in the market, using market prices that apply according to market mechanisms," he said in his statement, Friday, December 27.

The bilateral debt switch with the government was carried out on SBN which came from the Joint Agreement of the Minister of Finance and BI Number 326/KMK.08/2020 and Number 22/8/KEP.GBI/2020 dated July 7, 2020 as amended by the Joint Agreement of the Minister of Finance and BI Number 347/KMK.08/2020 and Number 22/9/KEP.BI/2020 (SKB II) dated July 20, 2020, which will mature in 2025.

Denny said that the debt switch mechanism was carried out by exchanging between maturing SBN and regular SBN, which could be traded in the market (tradeable) using the applicable market price according to the market mechanism.

"The replacement SBN is SBN with a longer tenor in accordance with the needs of Bank Indonesia's monetary operations and the government's fiscal sustainability," he said.

Denny emphasized that the bilateral SBN exchange mechanism between the Ministry of Finance and Bank Indonesia had been carried out previously, including in 2021 and 2022.

The Ministry of Finance and Bank Indonesia, he said, wassuance and purchase of SBN in a transparent, accountable manner, according to market mechanisms, and with strong governance.

According to Denny, further implementation is coordinated from time to time as has been going on closely, taking into account the dynamics of economic development and financial markets both domestically and globally.

"The chaotic coordination of government fiscal policies and the prudent monetary policy of Bank Indonesia is very important in maintaining stability and supporting sustainable national economic growth," he said.