• 18 Feb

    Issue US $ 2 billion in green sukuk, economists call government debt still Safe


    The government is re-issuing State Sharia Securities (SBSN) or Global Sukuk Wakalah for sustainable financing (green sukuk) worth US $ 2 billion. Although the government's foreign debt has increased, the Asian Development Bank Institute Economist Eric Sugandi said that the issuance of SBSN is still reasonable and within the corridor of financing the state budget deficit.

    "This will certainly be recorded as new foreign debt in the sulni. By looking at the ratio of nominal GDP, the risk of government foreign debt is still under control," 

    Eric further argued that the issuance of SBSN denominated in the United States dollar was good because it did not involve the process of converting foreign exchange against rupiah and the like. He said, if the denomination was in the form of rupiah, then the demand for rupiah from investors would increase if they bought SBSN. Meanwhile, if foreigners leave, the demand for foreign exchange or the US dollar will increase so that the rupiah can weaken.

    The same was stated by Director of the Indonesian Center for Reform on Economics (Core) Research Pieter Abdullah Redjalam. He said, the issuance of this tribal green indeed government debt would increase.

    However, this global sukuk issuance has calculated debt repayments that are due this year and is based on an agreement between the government and the House of Representatives. According to him, the publication was carried out to close the 2019 state budget deficit.

    Pieter added, the risk of government foreign debt is still very measurable. Given that this increase in debt does not change the ratio of government debt which is still around 30% of GDP. "The positive impact of this global sukuk issuance will increase foreign exchange reserves," Pieter explained.

    Economist Maybank Myrdal Gunarto also said the government's foreign debt position was still safe because the government debt ratio was still low and the prospect of US dollar volatility against the rupiah was lower because the Fed looked more dovish in the next few years.

    Not only that, he also said that the debt that had matured this year made the risk no greater. "This debt is still manageable," Myrdal said. Meanwhile, apart from the government's foreign debt, Eric said the BUMN debt should receive greater attention because it was listed as a component of private debt in Sulni.

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