Inflation Control and Financial Facilities Strategy
Bank Indonesia Policy Mix: May 2020
Mitigating the risk of COVID-19 transmission
B BANK INDONESIA
BANK SENTRAL REPUBLIK INDONESIA
Mechanism for Bank Indonesia to purchase SBN in the primary market to finance
the State Revenue and Expenditure Budget (APBN) - Above the Line
In accordance with the joint decree issued by the Minister of Finance and Bank Indonesia Governor, SUN/SBSN purchases by
Bank Indonesia in the primary market are based on general practices through transparent market mechanisms to maintain good
governance. The mechanism for Bank Indonesia to purchase SUN/SBSN in the primary market is divided into three stages as
follows:
(i) Phase I: As a non-competitive bidder, Bank Indonesia can purchase SUN/SBSN in the primary market based on the following
provisions:
(ii)
(iii)
■ Yield commensurate with the weighted average yield of the auction on the same day
■ Maximum SUN bid of up to 25% of the target auction maximum and maximum bid on SBSN > 1 year of up to 30% of
the target auction maximum.
Phase II: A greenshoe option based on the following provisions:
■ Yield commensurate with the weighted average yield of the auction on the previous day.
■ If the incoming bid is lower than the auction target, the maximum offer is the same as the previous offer.
Phase III: Private placements based on the following provisions:
Refer to the latest market price published by the Indonesia Bond Pricing Agency (IBPA).
■ Private placements are implemented if the Government seeks additional financing based on the agreed terms and
conditions.
Bank Indonesia provide interest remuneration on the government account as a form of burden sharing to reduce the state
budget burden.
SBN purchases by Bank Indonesia in the primary market as a follow-up action to Act No. 2 of 2020 currently stand at
IDR23.98 trillion, with IDR166.21 trillion purchased in the secondary market for stabilisation purposes. Consequently, BI
holdings of SBN were recorded at IDR443.48 trillion on 26th May 2020.
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