In a statement, Finance minister of Indonesia Sri Mulyani Indrawati said that the country’s central bank will be buying 574.59 trillion rupiah ($40bn ) of government bonds in 2020 to support the economy.
As the coronavirus is wreaking havoc on global economy, Indonesia’s measure with the program will focus on to finance this year’s fiscal deficit, expected to reach 6.34% of GDP in 2020. Compared with a growth of 5% last year, the government is hopeful of the country’s GDP to fall in between a 0.1% contraction and 1% expansion.
As per Indrawati, around 397.56 trillion rupiah of bonds will endow the public interest programs with the cost fully financed by the central bank. The rest of the bond money will aid in the recovery of various businesses.
The bond program with its debts will supposedly yield long maturities and will be tradeable that will assist Bank Indonesia (BI) to use them for its financial operations, Indrawati added. Perry Warjiyo, Governor of BI said the scheme will have a small impact in 2020 ton inflation, which hit a 20-year low in the month of June owing to the weak demand, while the bank will continue to gauge the impact on future inflation and rupiah exchange rate.
