Substantial amounts of international investment have been pulled out of Indonesian bonds following Prabowo Subianto’s win in the general election.
ubstantial amounts of international investment have been pulled out of Indonesian bonds following Prabowo Subianto’s win in the presidential election.
News agency Bloomberg reported that global funds have withdrawn US$1.1 billion from Indonesian bonds since balloting closed on Feb. 14, when unofficial quick counts suggested that Prabowo had won by a large margin.
The preliminary results turned out to be accurate as the General Elections Commission (KPU) officially announced on Wednesday that the Gerindra Party chairman garnered 58.6 percent of the vote.
Foreign net sales of Indonesian bonds were recorded on 16 of 20 days following voting day, meaning foreigners divested more than they invested in Indonesian bonds on those days.
Throughout the campaign period, Prabowo vowed to maintain fiscal discipline. However, some raised questions about how he would fund a nationwide program for free school lunches and nutritional support, his flagship election promise.
The program, which targets more than 82 million students from preschool to senior high school as well as toddlers and pregnant women, is expected to cost at least Rp 100 trillion (US$6.4 billion) in its initial year and an estimated Rp 460 trillion annually once it reaches full scale in 2029.
That would be equivalent to 12 percent of this year’s state budget and approximately 2 percent of the country’s GDP.
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