Government Proposes 3 Measures to Safeguard Bond Market

The government announced three ways it can buy government bonds (SUN) to safeguard the local bond market when sudden reversals occur, Finance Minister Agus Martowardojo says.

The first measure would be to utilize funds allocated by state firms to buy government bonds to stabilize spiking prices when capital outflows occur in the Indonesians debt market, Agus said Monday.

The second measure, he said, will use funds from the state budget’s monthly surplus, while the third measure would be to utilize funds from the budget’s overall surplus (SAL).

“We will ask for the House of Representatives to approve the use of SAL funds to stabilize bond prices,” Agus said after a meeting at the Coordinating Economic Ministry in Jakarta.

Other than the bond fund, Agus said Bank Indonesia could also use Indonesia's foreign exchange reserves, which reached US$96 billion by the end of December 2010, as well as bond buyback funds allocated in the 2011 state budget, to tackle sudden reversals.

Source: The Jakarta Post, Jakarta | Mon, 01/31/2011 1:13 PM | Business