Economics
Why Bank Indonesia Will Fund $40 Billion of Government’s Budget
- Central bank set to buy sovereign bonds at zero, special rates
- Government wants central bank to share more of funding burden
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Indonesia’s central bank is close to an agreement to fund $40 billion of the government’s fiscal response to fight the coronavirus pandemic this year, the largest debt monetization program among emerging-market nations.
Bank Indonesia has already been buying bonds directly from the government at auctions to help finance its budget spending. Now it’s preparing to go one step further by purchasing a pre-determined amount of assets at zero interest or below the market rate.