Indonesia

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.

Indonesia's trade surplus is expected to show an expansion in July after the government imposed mobility restrictions to control a spike in COVID-19 cases, squeezing exports and imports, a Reuters poll showed on Friday. Southeast Asia's biggest economy has been enjoying an export boom on the back of high commodity prices, allowing for a trade surplus every month since May of 2020. The median forecast of 10 analysts in the poll was for a July trade surplus of $2.27 billion, up from the previous month's $1.32 billion.

Slow stimulus spending threatens Indonesia’s recovery as smaller businesses that are the backbone of the economy have been kept waiting for much-needed funds to weather an extended lockdown, Bloomberg News reported. Only about 30% of more than 186 trillion rupiah ($13 billion) of combined national and provincial government aid has yet been disbursed for micro, small and medium-sized enterprises, Finance Ministry data show.

Flag carrier Garuda Indonesia (GIAA.JK) will return nine leased Boeing 737 800NG aircraft ahead of schedule, as part of an agreement to end a bankruptcy lawsuit, the company's chief executive Irfan Setiaputra told Reuters on Monday. Garuda and its lessor, Aercap Ireland Limited, signed a global side letter agreement on July 28 to stop legal proceeding, following Aercap's bankruptcy lawsuit in June at the New South Wales Supreme Court, Garuda said separately in a stock exchange filing.

Indonesia’s finance minister expects the budget deficit to stay elevated next year as the nation’s worst coronavirus surge hampers the recovery and efforts to boost state revenue, Bloomberg News reported. The fiscal shortfall could reach 4.7%-4.8% of gross domestic product in 2022, Finance Minister Sri Mulyani Indrawati told Bloomberg Television’s Haslinda Amin. That’s near the top end of the government’s 4.5%-4.85% projection. “We’ll try very hard to return to fiscal discipline in 2023. But at the same time, we’ll also be very pragmatic,” Indrawati said.

Troubled flag carrier PT Garuda Indonesia put off the payment on its Islamic debt once again, highlighting its financing crunch as the firm tries to avoid bankruptcy, Bloomberg News reported. The Southeast Asian airline, struggling as the pandemic depresses air travel worldwide, said it “will continue to defer the periodic distribution amount due June 3,” in a filing to the Singapore stock exchange on Thursday. The state-owned company missed the distribution payment on a $500 million sukuk on June 3, and a 14-day grace period ended on Thursday.

Creditors of PT Sri Rejeki Isman, Indonesia’s biggest listed clothing firm, have submitted about 20 trillion rupiah ($1.4 billion) of outstanding claims as part of a debt-restructuring process, Bloomberg News reported. The claims include about 700 billion rupiah submitted by secured creditors and around 19 trillion rupiah from unsecured creditors as of June 10, according to Alfin Sulaiman, a member of an administrator team appointed by Indonesia’s Semarang commercial court. Verification is ongoing and the final amount will be released soon, Sulaiman said on Friday.

National flag carrier Garuda Indonesia will seek a suspension of debt payments to creditors and lessors under a 'standstill agreement' in order to avoid bankruptcy, a senior government official said on Thursday, Channel News Asia reported. The coronavirus pandemic has put the state-controlled airline's finances under serious strain with a negative cashflow of about US$100 million a month and ballooning debt, Kartika Wirjoatmodjo, Indonesia's deputy minister of state-owned enterprises (SOEs), told a parliamentary hearing.