Bank Indonesia to Raise Remuneration on Government Funds

Bank Indonesia (BI) is preparing to raise the remuneration it pays to the government on deposited funds, a move aimed at controlling the nation's debt interest burden. BI Governor Perry Warjiyo announced the plan, stating it's a response to concerns raised by global credit rating agencies regarding Indonesia's debt interest payments relative to its income.

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So far, we have provided remuneration for the government's account at BI. We will reconsider the amount of remuneration to ensure that the government's interest burden remains controlled.

"So far, we have provided remuneration for the government's account at BI. We will reconsider the amount of remuneration to ensure that the government's interest burden remains controlled," Warjiyo told reporters. He explained that increasing this remuneration would effectively decrease the government's obligation to pay interest on its bonds (Surat Berharga Negara - SBN).

Finance Minister Purbaya Yudhi Sadewa supported the initiative, noting that the incentive from BI would enhance the government's cash flow. "So, even if new debts are issued, if there's an increase in interest, there's someone to cover it," he said. This measure comes as S&P Global Ratings previously flagged Indonesia's debt interest-to-income ratio, which has surpassed 15 percent.

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So, even if new debts are issued, if there's an increase in interest, there's someone to cover it.

Indonesia's debt interest payments are projected to reach nearly Rp600 trillion this year, a significant increase from previous years. The state budget (APBN) targets Rp599.5 trillion for these payments, up from Rp552.1 trillion in 2024 and Rp488.4 trillion in 2023. The central bank's decision aims to alleviate some of this financial pressure.

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They issued a warning, delved deeper into the discussion, that the interest payments compared to the income exceeded 15 percent.