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Jakarta Post

Islamic government bonds to fund projects worth $2b this year

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Thu, January 23, 2020   /   04:28 pm
Islamic government bonds to fund projects worth $2b this year Finance Ministry Financing and Risk Management Director General Luky Alfirman (left) talks to reporters at the Indonesia Stock Exchange (IDX) building in Jakarta in this undated photo. (JP/Anton Hermansyah)

The Finance Ministry is set to issue project-linked Sharia sovereign bonds (SBSN) this year to fund the development of 728 projects worth Rp 27.35 trillion (US$2 billion).

Finance Ministry Financing and Risk Management Director General Luky Alfirman said the SBSN issuance was an alternative way to finance government projects ranging from infrastructure to education programs.

“We will fund several infrastructure projects from the Public Works and Housing Ministry and the Ministry of Transportation,” Luky told reporters in Jakarta on Thursday.

According to the ministry’s presentation material, the bonds will finance 171 road and bridge construction projects, 66 water resources projects, 19 railway stations, four seaports, four airports and 25 college building and facilities projects, among other things.

Last year, 619 projects with a total value of Rp 28.43 trillion have been financed through such project-linked SBSN, according to ministry data. Approximately 32 percent of the amount was used to finance infrastructure projects under the Public Works and Housing Ministry.

Project-linked SBSN were first issued in 2013 to build an Rp 800 billion railway connection between Cirebon and Kroya in West Java.

The government has raised Rp 1.23 quadrillion in funds with a total outstanding of Rp 738.37 trillion through the issuance of project-linked SBSN.