Indonesian To Boost Rupiah Bond Sales To Fund Widening Deficit
The government will boost rupiah-denominated bond sale this year to raise funds to plug its widening budget deficit, a finance ministry official said on Wednesday.
Rahmat Waluyanto, director general of the debt management office at the finance ministry, said the government will prioritize rupiah-denominated bond sales this year ahead at the sale of dollar-denominated notes.
“our priority is for more rupiah-denominated bond sales, but it could be mixed. We are flexible and we are going to take more efficient route,” Rahmat said in text message.
He did not say if a dollar-denominated bond sale was still being considered.
The government proposed in the state budget, submitted to legislature this week, to raise net bond sales by Rp 25 trillion to Rp 159,6 trillion this year. The amount was higher than the original estimate of Rp 134,6 trillion.
The government sold rupiah and dollar-denominated bonds in past years to finance its budget deficit. The budget shortfall is forecast to hit Rp 190 trillion this year, representing 2, 2 percent of gross domestic product, compared to the original forecast of 1,5 percent. “ market demand remains good” said indo premier securities analyst Dino Nunuhitu. “ investor will flock in to the upcoming bond sales.”
The government raised Rp. 1,6 trillion by selling rupiah. Denominated Islamic bond on Tuesday . total bids by investors reached Rp. 5,3 trillion, according to data from the web site of the debt management office.
The government also plant to sell rupiah-denominated Islamic bonds to retail investors next week.
The government set the return on notes maturing in September 2015 at 6.25 percent. Dahlan Siamat, director for Islamic financing at the debt management office said that demand was substantial.