Govt prepares Rp 3t to buyback bonds at times of crisis

The government has allocated Rp 3 trillion (US$320million) from this year’s state budget to buyback its own debt paper at times of emergency or crisis that could potentially affect the country’s economic stability.

Rahmat Waluyanto, director general of the country’s debt management office, said Monday that the prepared Rp 3 trillion funds would be used as the government’s first line of defense in tackling massive capital outflows. The government will continually monitor and pay close attention to the nation’s bond market to determine any necessity to intervene.

“The second line of defense would be the bond stabilization framework by state-owned companies. The government’s function will be to signal the necessity for the firms to step in,” Rahmat told reporters after a meeting with lawmakers at the House of Representatives in Jakarta.

As for the third line of defense, he added, the government will use its cash reserves. “The fourth will be SAL [budget surplus].”

“We are laying out a PMK [Finance Ministry regulation] so that the layers could have their own standard operating procedures,” Rahmat added.