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BI as the Last Resource for Purchasing Government Securities in the Primary Market is Sure It will not cause Inflation

Jakarta, 24/04/2020 Ministry of Finance - Bank Indonesia Governor Perry Warjiyo stated that Government Securities (SBN) purchased on the primary market by BI will not cause inflation.

The reason is because in COVID-19 financing according to Perppu No. 1 of 2020, the purchase of SBN by BI on the primary market is an additional financing of fiscal deficits. BI is the last resource or non competitive competitive if banks cannot absorb SBN / Islamic Government Securities or State Sukuk (SBSN) at regular auctions.

"If the regular auction is insufficient, BI as the last resource means BI in the regular auction becomes a non competitive bid. The amount, if the SBSN is a maximum of 30% of the maximum target auction to be conducted by the government," he explained in a live streaming of Recent Economic Developments on Wednesday, (22/04) in Jakarta.

He explained that the government would seek financing for COVID-19 from existing sources in advance namely SiLPA (Surplus Budget Finance), Public Service Agency (BLU) funds, funds from world financial institutions such as the ADB and World Bank and the issuance of global bonds such as series RI1030, RI1050 and RI0470, all of which have a total value of USD4.3 billion.

"The government will first maximize existing sources of funds (such as) from SiLPA, funds at BLU, Asian Development Bank funding, World Bank and so on, also issue global bonds," he concluded. (nr / f)