Indonesia cenbank to buy more govt debt in 2025 in deal over maturing COVID bonds

JAKARTA : Indonesia's central bank said it will buy 150 trillion rupiah ($9.3 billion) of state bonds in the secondary market next year, more than replacing around 100 trillion rupiah of maturing bonds bought for a COVID-era programme, under a deal agreed with the government.

Bank Indonesia (BI) bought tens of billions of dollars worth of government bonds from 2020 to 2022, and relinquished interest payments on some of them to the government, under a "burden sharing" arrangement with fiscal authorities intended to fund costs related to the COVID-19 pandemic.

As much as 100 trillion rupiah of those notes will mature in 2025, according to the government's financial report.

"BI has agreed to buy government bonds in the secondary market in a bigger amount than the amount that will mature under burden sharing," Governor Perry Warjiyo told a press conference on Wednesday after BI's regular monetary policy review meeting.

"As part of monetary operation plans, the purchases can reach 150 trillion rupiah," Warjiyo said, before adding the final figure could be even higher than that.

Warjiyo said the plan was consistent with the central bank's objectives for monetary operations, and buying government bonds was one of its tools to expand money in circulation.

Monetary and fiscal policymakers were working on the details and there would be further explanation, Warjiyo added.

New Indonesian President Prabowo Subianto has planned spending of 3,621.3 trillion rupiah in his 2025 budget, up 6 per cent from this year. The budget has a deficit forecast of 2.53 per cent of GDP.

($1 = 16,085 rupiah)