Indonesia

Creditors of struggling airline PT Garuda Indonesia have submitted about 198 trillion rupiah ($13.8 billion) in claims as part of a debt restructuring, according to court-appointed administrators, Bloomberg News reported. The administrators for the flag carrier received claims from more than 470 creditors by the end of a Jan. 5 deadline, Martin Patrick Nagel and Jandri Siadari, members of the team of administrators, wrote in replies to questions from Bloomberg. They will now verify the provisional claims and decide on Jan.

For Balinese souvenir shop owner I Kadek Rai Nama Rupat, the past two years during the COVID-19 pandemic have been a fight for survival. The pandemic has prevented the foreign tourists that usually throng businesses like his on the Indonesian resort island from coming and rising food prices have compounded the economic pain, Reuters reported. But a local non-profit group is offering help by exchanging rice for plastic trash that is then sold to a recycling company.

A debt restructuring just getting underway at flag carrier PT Garuda Indonesia is forcing creditors to weigh short-term losses against the potential for gains further down the line in one of the fastest growing aviation markets in Asia, Bloomberg News reported. The airline is entering a court-supervised debt restructuring process after a Jakarta court on Thursday accepted a debt petition filed against it. Garuda and its creditors have 45 days to complete negotiations, which can be extended to 270 days.

Indonesia’s central bank bought 58 trillion rupiah ($4 billion) of government bonds, the first transaction in its latest round of debt monetization, Bloomberg News reported. Bank Indonesia purchased 14.5 trillion rupiah each of four series of notes due in five to eight years via a private placement, the finance ministry’s debt management office said on Tuesday. Future bond-buying by the central bank will be done gradually, in line with the government’s need to fund its pandemic stimulus, the office said in a statement Tuesday.

Indonesian clothing firm PT Sri Rejeki Isman plans to propose the reactivation of working capital facilities through a revolving loan in the amount of $275 million in a creditors’ meeting, Bloomberg News reported. The secured working capital revolver would help the Jakarta-listed company, known as Sritex, in the procurement of raw materials and reduce the needs to make cash advance payments to its raw material suppliers, according to a proposed term sheet dated Nov. 5 that was accessed through a link in a filing to Singapore exchange on Saturday.

PT Garuda Indonesia needs at least $1 billion of additional funds to cut debt and stay afloat, as the government says it could give up its majority control of the troubled flag carrier, Bloomberg News reported. Garuda is currently in talks with creditors to restructure $6.3 billion worth of debt and expects to reach an agreement in the second quarter of 2022, according to Kartika Wirjoatmodjo, a deputy minister at Indonesia’s State-Owned Enterprises Ministry.

Indonesia's central bank kept its policy rates steady at record lows on Tuesday to support a tentative recovery, even as economic activity picked up in recent months thanks to rebounding consumption and robust commodity exports, Reuters reported. Bank Indonesia (BI) held the benchmark 7-day reverse repurchase rate steady at 3.50% for the eighth month, saying the decision was in line with the need to support the recovery while keeping the rupiah stable. All 29 analysts in a Reuters poll had expected the move.

Indonesia is preparing a backup plan for flag carrier PT Garuda Indonesia if it fails to reach a deal with creditors, including the option of upgrading air charter PT Pelita Air Service to a scheduled airline, Bloomberg News reported. The course of Garuda’s current talks with creditors hinges on a court decision on a debt petition against the airline, with the ruling set to be announced Thursday, Kartika Wirjoatmodjo, a deputy minister at the State-Owned Enterprises Ministry, said by text message on Tuesday.

Indonesia's central bank will purchase government bonds worth up to 439 trillion rupiah ($30.46 billion) in 2021 and 2022 to provide cheaper financing for the government's COVID-19 relief measures, senior officials said, Reuters reported. The fiscal deficit financing scheme is similar to an agreement Bank Indonesia had with the finance ministry last year to fund ballooning health care and welfare bills amid the pandemic, which authorities said was a one-off measure. Investors and economists have raised concerns about the scheme's effects on inflation and the rupiah.

Indonesia’s central bank left its benchmark interest rate at a record low to protect the currency, and said it had formulated a plan to deal with eventual U.S. policy tightening, Bloomberg News reported. Bank Indonesia kept the seven-day reverse repurchase rate at 3.5% on Thursday. Interest rates have been on hold since February’s 25-basis point reduction, and are widely expected to stay at this level throughout 2021.