Purbaya Replies to S & P
Jakarta (ANTARA) – Finance Minister Purbaya Yudhi Sadewa expressed his commitment to maintaining the State Budget (APBN) deficit, in response to concerns of Standard & Poor’s Global Ratings (S&P) regarding Indonesia’s debt service ratio. “There are slight concerns about our debt service to tax revenue ratio, but I assure them that it can be controlled and has not yet reached a dangerous level,” Purbaya said in his statement on Thursday. According to the minister, S&P inquired in detail about Indonesia’s fiscal condition, including its consistency in maintaining the deficit below the 3 percent threshold of GDP. Purbaya explained a possibility that the 2025 State Budget deficit in the Central Government Financial Report (LKPP) will decrease from the initial projection after audit by the Supreme Audit Agency (BPK).
Indonesia Urea Steps Up
Deputy Agriculture Minister Sudaryono said governments of four countries had approached Jakarta for possible urea imports, as the disruption of shipping through the Strait of Hormuz has sent shock waves through global fertilizer markets and pushed prices sharply higher. “Those that have reached out so far are India, the Philippines, Brazil and Australia,” Sudaryono said on Wednesday after meeting Australian Ambassador to Indonesia Roderick Brazier in Jakarta, as quoted by news agency Antara. Roughly one-third of global fertilizer exports pass through the strait, which at it’s narrowest point measures only 34 kilometers between Iran to the north and Oman to the south. Indonesia’s domestically anchored production, reliant on natural gas as a key feedstock, positions the country as a relatively stable supplier. Sudaryono noted that the national urea production capacity stood at 14.5 million tons annually, exceeding domestic demand. The government projects excess supply of around 1.5 million tons in 2026, which could be allocated for exports.
OJK Draft Regulation Could Affect Bank Independence
The Financial Services Authority (OJK) is revising its regulation on bank business plans (RBB), including a provision for banks to align credit disbursements with the government’s priority agenda. While the revision is seen as a potentially effective measure to bolster inclusive funding, experts warn that it may distort Indonesia’s banking industry focus from commercial lending to national development. According to the draft regulation released on the authority’s website, banks are required to issue loans to support the government’s agenda, such as the housing and energy self-sufficiency programs. The draft also emphasizes lending push for the micro, small and medium enterprises (MSME) sector, which has recorded contraction over the past few months. Rizal Taufikurahman, head of the Center of Macroeconomics and Finance at the Institute for Development of Economics and Finance (INDEF), said that while the regulation was relevant for strengthening intermediation during a slowdown in credit growth, the approach might shift away from banks’ pure commercial motive toward a “semi-developmental” role. “This is potentially causing distortions if not implemented with prudent principles. The main risk is that credit allocation will be based on mandate instead of business feasibility,” he told The Jakarta Post on Wednesday. (Jakarta Post)
MSCI Not Changing Its Stance Yet
Global index compiler MSCI has decided to keep its measures on Indonesian equities in place for the May index review, despite efforts by local authorities to address the transparency concerns outlined in the firm’s January warning. The organization said it is still assessing the effectiveness of the remedies introduced and is set to make a final decision in its June review. The uncertainty weighed on investor sentiment, with the Indonesia Stock Exchange (IDX) Composite Index slipping 0.46 percent on Tuesday, even as major Asian markets such as Tokyo, Seoul and Hong Kong advanced on optimism that the Iran conflict may be nearing an end. In an announcement on Monday, MSCI stated that it “acknowledges” the “market transparency reforms” made by the IDX, Financial Services Authority (OJK) and Indonesia Central Securities Depository (KSEI). The measures MCSI wants Indonesia to address comprise enhanced shareholders disclosure, increased granularity in investor classification, introduction of the high shareholding concentration (HSC) framework and the roadmap for the increase of minimum free float requirement to 15 percent. Interim IDX president director Jeffrey Hendrik said in a statement on Tuesday that IDX had met with MSCI last Thursday and “appreciated” MSCI’s acknowledgment of the remedies. “We will keep communicating with index providers. We will also keep communicating with global investors to get inputs for reinforcement of the capital market going forward,” said Jeffrey. (Jakarta Post)