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Debt Management

Debt Management. Moody’s Visit Dire c torat e G eneral of Debt Management Ministry of Finance of The Republic of Indonesia. Total Debt Management Profile. Debt Financing Trend, 2004 – 2008. Budget Deficit Financing. Source: Ministry of Finance.

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Debt Management

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  1. Debt Management Moody’s Visit DirectorateGeneral of Debt ManagementMinistry of Finance of The Republic of Indonesia

  2. Total Debt Management Profile

  3. Debt Financing Trend, 2004 – 2008 Budget Deficit Financing Source: Ministry of Finance Notes:+ = Projection based on Revised State Budget 2008 ++= Projection based on State Budget 2009Others/Non-Debt include privatization and other sources Ministry of Finance of the Republic of Indonesia

  4. Selected Ratio Debt to GDP Ratio (% of GDP) Debt Service to Revenue and Expenditure Ratio (%) Debt Service to GDP Ratio (%) Debt Service to Tax Revenue & Central Government Expenditure Ratio (%) Notes: Central Government Expenditure = Total Expenditure minus Transfer to Regions * = Preliminary Debt Service = Principal and Interest Payment ** = Very preliminary *** = Projection based on Revised State Budget 2008 **** = Projection based on State Budget 2009 Source: Ministry of Finance Ministry of Finance of the Republic of Indonesia

  5. Outstanding of Total Central Government Debt Notes:Nominal in billion USD+ Preliminary numbers++ Very preliminary numbers +++ Very very preliminary numbers, * Some of them are semi commercial** Most of them are semi concessional*** All of them are commercial Ministry of Finance of the Republic of Indonesia

  6. Maturity Profile of Government Debt Portfolioas of September 2008 Promissory Notes to Bank Indonesia Source: Ministry of Finance • Covers all central government debt Ministry of Finance of the Republic of Indonesia

  7. Debt Structure as of Sep 2008 Notes: * = Preliminary ** = Very preliminary *** = Very very preliminary, as of Sept. 2008 FR = Fixed Rate VR = Variable Rate By Currency Type*** Debt Composition By Maturity Sectors *** By Interest Rate Type*** Source: Ministry of Finance Ministry of Finance of the Republic of Indonesia

  8. Debt Securities Operation

  9. Government Securities Issuance Program (year to date)

  10. Profile of Government Debt Securities Since October 2006, Government and Central Bank committed to replace interest payment of Promissory Notes to Bank Indonesia (SU-002 & SU-004) with new bond (SU-007) and omitted indexation of SU-002 & SU-004 Source: Ministry of Finance

  11. Until end of October 2008 the Government has conducted 21 times auctions in domestic market. This year total government debt securities has been issued is reaching to IDR 86,93 trillion. Domestic Issuance Source: Ministry of Finance

  12. International Issuance 12

  13. Debt Switching Program • In 2006 GOI has successfully switched Rp31.2 trillion of bonds consist of Rp9.9 trillion which matured in 2007, Rp11.4 trillion matured in 2008, Rp6.1 trillion matured in 2009, Rp1.5 trillion matured in 2010 and Rp2.3 trillion matured in 2011 • In 2007 GOI has successfully switched Rp15,8 trillion bond maturing between 2007-2012 into long dated bonds maturing 2022-2027 • Up to August 2008 GOI has successfully switched Rp4,6 trillion bond maturing between 2009-2013 into long dated bonds maturing 2022-2023

  14. Cash Buyback Program • In 2006, the government did not use cash to purchase or redeem any government bonds. • In 2007, the government resumed the purchase of government bonds, purchasing Rp1.7 trillion in August and Rp1.2 trillion in December. • In 2008, the government resumed the purchase of government bonds, purchasing Rp2.0 trillion in April and Rp 41 bio in October and Rp 327 bio In November

  15. Government Securities-Risk Indicators

  16. Ownership Government Bond Source: Ministry of Finance

  17. Government Securities Under Market Turmoil

  18. Net Buyer (Seller) Of Government Securities (IDR Billion)

  19. Secondary Market Transaction : average daily trading Source: Ministry of Finance

  20. Highest Yield Curve Obligasi Negara (IDMA/Himdasun) 13 Sep’05, 16 Jun’06, 22 Ags’07, 31 Des ‘07, 10 Okt & 17 Nop 2008 20 Sumber: IDMA, Bloomberg

  21. Yield Curve Obligasi Negara (IDMA/Himdasun ) Des ’07, Mei’08, Juni, Sept, 31 Okt & 7 Nop 2008 Sumber: IDMA, Bloomberg

  22. Yield Curve Obligasi Negara (IDMA/Himdasun ) 7, 29, 30, 31 Okt, 3 & 11 Nop 2008 Sumber: IDMA, Bloomberg

  23. Price of Govt. Bond Benchmark Series Declining the price of Benchmark Series (24-27 Okt’08), mencapai 678 s.d 976 bps. Regional bourse bearish 12.7% due to global recession fears. Thailand and Rumania bourse were suspended. The decline of Govt Bonds reaching almost 600 bps Establishing Perpu No. 4 ttg JPSK Perpu No. 3 ttg LPS Perpu No. 2 ttg BI Buyback

  24. Credit Default Swap, Indonesia & Other Emerging Markets CDS Curve Movement - Indonesia Historical CDS Movement, 5 & 10 yr - Indonesia 18 Nov. 2008 1 month before 10 yr 5 yr 3 month before 1 yr before Historical CDS Movement, 5 yr – Emerging Mkt. Asia Indonesia Vietnam Philippines Korea Malaysia Thailand Source: Bloomberg Ministry of Finance of the Republic of Indonesia

  25. Government of Indonesia Policies To protects market and to minimizes the effects of the current global financial crisis, the Government of Indonesia has released four regulations, i.e.: • Perpu No. 4/2008 regarding Financial Systems Safety Net.. • Perpu No. 3/2008 amends Law No. 24/2004 regarding the Deposit Guarantee Corporation (LPS). • Perpu No. 2/2008 amends Law No. 23/1999 regarding Central Bank of Indonesia. • Government Regulation No. 66/2008 regarding the Amount of the guarantee provided by the LPS.

  26. Steps to Calm The Market • Maximizing repurchase agreement (repo) facility to banks with liquidity problem and providing best price and apropriate term • Lowering over night (O/N) repo rate, to BI Rate plus 100 bps from BI Rate plus 300 bps • Extending fine tune operation (FTO), previously 1 to 14 days becomes 1 to 3 months • Adjusting FASBI rate, from BI Rate minus 200 bps to BI Rate minus 100 bps • Increasing BI Rate by 25 bps to 9,50% • Lengthening tenor of FX Swap, from 7 days at the maximum to 1 month • Providing sufficient foreign currency for domestic companies through banking system • Decreasing the Requirement of Foreign Currency Statutory Reserves (Foreign Currency GWM) of conventional and syariah banks from 3.0% to 1.0% • Revoke articles No. 4 of PBI No. 7/1/PBI/2005 regarding the limit on the amount of daily balance of short term external debt • Simplifying Rupiah GWM calculation, only in the form of statutory reserves at 7.5% of DPK.

  27. Financing 2009 and The Strategy

  28. Financing 2009 Notes : Figures are in trillion IDR 28

  29. Steps taken to maintain: State Budget 2009 Sustainability

  30. Debt Management Strategy for 2009 • Shortening duration in 2009 • Intensifying debt switching and cash buyback for coping with refinancing risk. • Utilizing MTN Program or SEC Shelf Registration • Intensifying private placement • Shifting financing sources from marketable securities to stand-by loan from multilateral and bilateral institutions.

  31. End of PresentationThank You Directorate General of Debt ManagementMinistry of Finance of The Republic of Indonesia AA Maramis I Building 3rd FloorJalan Lapangan Banteng Timur No.1Jakarta Pusat - 10710 Phone : (6221) 350 0841Fax. : (6221) 384 6635Website: www.dmo.or.id

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