T

he government aims to raise Rp 200 trillion (US$22.4 billion) through government bonds next year in a move to plug the 2011 state budget deficit, an official says.

Rahmat Waluyanto, the Finance Ministry’s director general of debt management, said in Jakarta on Tuesday the ministry was currently assessing different debt instruments that would be issued next year.

“The Rp 200 trillion funds will be needed to refinance maturing loans, for buybacks and to cover the 2011 state budget deficit,” Rahmat told reporters.

According to the 2011 state budget recently approved by the House of Representatives, the country will suffer a Rp 124.7 trillion deficit, or equivalent to 1.8 percent of the gross domestic product (GDP), up from the original target of 1.7 percent of GDP.

Data from the Finance Ministry also shows the government will have Rp 67 trillion of maturing notes in 2011. The treasury notes which will mature this year are estimated to reach Rp 36 trillion.

Analysts have previously said that more foreign funds are expected to flood into the country’s debt market following a round of stimulus packages introduced by the United States government.

According to data from the central bank, Bank Indonesia, as of the first week of November, foreigners held a record high 31 percent of government bonds.

Rahmat said next year’s Rp 200 trillion bond issuance would include a combination of domestic, international, retail and non-retail notes, including so-called samurai bonds, Euro bonds and Islamic bonds (sukuk).

“We will use a new scheme for the samurai bond issuance next year, the one that we used for the last samurai bond,” he said.

According to Rahmat, the new scheme no longer requires the government to issue the bonds only at a time of crisis as a contingency financing facility.

“Now, even state firms can issue samurai bonds with insurances from the JBIC [Japan Bank for International Cooperation].”

Rahmat added that if Indonesia’s investment rating was upgraded to investment-grade by just one more Japanese rating agency, samurai bond issuances would no longer need to be insured by the JBIC.

Japan Credit Rating Agency in July raised Indonesia’s sovereign credit rating by one notch to investment grade, a move that boosted the ¥60 billion samurai bonds issued by the government recently.

Another Japanese rating agency, Rating and Investment Information, is also expected to raise the nation’s debt rating to investment grade in the near future, said Rahmat, confirming that this would mean more samurai bond issuances next year.

As of Oct. 31, the government had sold Rp 150.91 trillion in bonds to cover the 2010 state budget deficit.

This year’s total treasury bond sales are projected to reach Rp 162.3 trillion, Rp 15 trillion lower than the original target.

The government has cut the bond issuance due to an estimated decline in the state budget deficit. (est)