Debt Need for 2010 Reaches IDR234 Trillion: Global Islamic Bond Next Year Targeted at US$750 Million

as published in Bisnis Indonesia daily newspaper

Wednesday, 16/12/2009 00:00 WIB

Debt need for 2010 reaches IDR234 trillion

Global islamic bond (sukuk) next year targeted at US$750 million

JAKARTA: The government plants to raise IDR233.66 trillion in financing next year through T-bond issuance and direct loans.

Rahmat Waluyanto, Director General of Debt Management at the Department of Finance, explained of IDR236.13 trillion in total financing for 2010, only IDR2.46 trillion would be non-debt financing, while the rest would come from gross T-bond issuance (IDR175.06 trillion), program loans (IDR24.44 trillion), project loans (IDR33.13 trillion), and domestic financing from national banks (IDR1 trillion.

"So, IDR233 is the total gross financing from T-notes and loan withdrawal," he explained after Investor Gathering yesterday.

Data by the Directorate General of Debt Management recorded the total financing need was based on the deficit of the 2010 State Budget, which is fixed at IDR98 trillion or 1.6% of GDP, on IDR129.47 trillion in due debt, and IDR8.64 trillion in loan forward payment plan.

The total due debt covers IDR58.84 trillion in foreign loans and IDR70.63 trillion in domestic bonds.

According to Rahmat, the government would optimize domestic financing to realize all new debt plants.

"The more we have rupiah-denominated debts, the better since we will be able to avoid loss on foreign exchange mismatch. We will try to have rupiah debts representing more than 50% of the total debt from the current 40%."

Global Islamic bond (sukuk)

In the meantime, Director of Islamic Financing at the Department of Finance Dahlan Siamat explained the indicative target for Indonesia's US dollar-denominated issue was fixed at US$750 million for June next year.

"It is still indicative and can be increased as long as demand is high and the condition sees it fit."

Previously, the government issued US$650 million in Islamic bonds in April of a total subscription of US$4.7 billion. HSBC Holdings Plc and Standard Chartered Plc help the government in issuing the bond.

In his presentation to investors yesterday, Dahlan explained the state currently had a total underlying asset of IDR25 trillion.

He added the government would also issue Islamic financing instrument next year, namely project-based Islamic bond, once it pocketed a religious decree from the National Islamic Council (DSN).

The government also plans to issue retail Islamic bond (sukuk) in early January.

Chief Economist of PT Mandiri Sekuritas Destry Damayanti suggested the government reschedule debts that would be due next year to alleviate the 2010 State Budget's burden. (Bisnis/agi/aca/21)