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Jakarta Post

BI to dominate 'pandemic bond' as debt burden grows

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Thu, April 9 2020   /  01:33 am

Bank Indonesia (BI) will dominate ownership of the nation’s “pandemic bonds” as the government seeks to safeguard the economy from COVID-19 at the risk of a rising debt burden, including from its longest ever 50-year bond tenure, economists say.

Bank Permata chief economist Josua Pardede said that foreign investors would be reluctant to buy risky assets including Indonesia’s sovereign debt papers amid the current market routs.

“The financing of pandemic bonds may be dominated by the central bank as foreign investors tend to avoid risky assets,” Josua told The Jakarta Post during a phone interview. “We expect that this will speed up the recovery of economic sectors affected by the COVID-19 pandemic.”

The government will issue nearly Rp 450 trillion (US$27.21 billion) worth of the so-called pandemic bonds to finance the country’s efforts to combat the...