Indonesian Government Securities (SBN), which were previously owned by many foreigners, are now being re-owned by the state. Based on data from the Ministry of Finance (Kemenkeu) in the APBN Kita book, currently, foreign investors only own 15.89%, much lower than the 2019 period. Then, what effect will it have on the national economy?
Government Securities that are returned to Indonesia will have a positive impact on the resilience of the country’s economic fundamentals, especially when there is high uncertainty from other parts of the world.
The book explains, “Currently, (government securities) ownership by foreign investors has continued to decline since 2019 which reached 38.57%, until the end of 2021 it was recorded at 19.05%, and as of July 5, 2022, it reached 15.89%.’
This achievement is also the reason for the relatively stable condition of the domestic bond market so far, even though capital flows have been pouring out for the last few weeks.
In his records, the bond market in May 2022 experienced an outflow of Rp 32.12 trillion. Then in June 2022, it was Rp 15.51 trillion and from July until yesterday it reached Rp 29.15 trillion.
Furthermore, the Minister of Finance of the Republic of Indonesia, Sri Mulyani at the press conference of our State Budget last weekend, said, “This is why despite the outflow, SBN is still relatively stable or resilient. So it is not swayed by the outflow.”
Therefore, the weakening of the rupiah also appears not to be too deep compared to other countries. The US dollar is now perched around the level of Rp. 14,800.
As of July 28, 2022, year to date (YTD), the Rupiah exchange rate weakened by 4.55%, relatively better than the depreciation of currencies in several countries in the region, such as Malaysia (6.46%), India (6.80%) ), and Thailand (9.24%).
Furthermore, as a commitment to improving the stability of the national economy, Sri Mulyani is fully committed to maintaining Indonesia’s debt. In particular, reducing the state budget deficit (APBN) back to a level below 3% of gross domestic product (GDP).
“The government will control the state budget deficit and maintain debt management within safe limits through a commitment to implement fiscal consolidation in 2023,” he said at a press conference, Monday (1/8/2022).
Sri Mulyani will also be very careful in issuing state securities (SBN) amid high global uncertainty. So that the withdrawal of debt does not cost very large.
“The government implements a flexible, opportunistic financing strategy but remains cautious,” he said.
Until the end of June 2022, the State Budget recorded a surplus of IDR 73.6 trillion or 0.39% of Gross Domestic Product (GDP). The primary balance is also still in a surplus of Rp 259.7 trillion.
The government’s debt position until June 2022 reached Rp 7,123.62 trillion. This is higher than the position at the end of May 2022 which amounted to Rp 7,002.24 trillion.
Meanwhile, the debt-to-Gross Domestic Product (GDP) ratio is now at the level of 39.56%.
Based on the type, government debt was dominated by SBN instruments which reached 88.46 percent of the total debt composition at the end of June 2022. Meanwhile, based on currency, government debt was dominated by domestic currency (Rupiah), which was 70.29 percent.
In addition, currently, ownership by foreign investors has continued to decline since 2019 which reached 38.57 percent, until the end of 2021 it was 19.05 percent, and as of 5 July 2022 it reached 15.89 percent.
