Indonesia

Indonesia to issue government bond for Aceh reconstruction

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Jakarta, Indonesia-Relief -- Ministry Finance's general director of state treasury Mulia Nasution confirmed that Indonesian government would issues government bond to finance Aceh and Nias reconstruction. Previously House Representative announced has reject government plan to spend 20005 national budgets for the reconstruction, and proposed to issue Rp 2 trillion bond. The bond will be offered on June 14.

On Monday, as reported by Kompas on Tuesday, the House reject the government plan to finance Rp 5,6 trillion of post-tsunami reconstruction because it will burden national budget and increase Indonesian deficit. Of the Rp 5.6 trillion, Rp 3.6 will be financed by money saved from CGI's debt moratorium. The remaining Rp 2 trillion proposed to be funded by selling government bond.

Nasution, as reported by Jakarta Post today, said that the bond will be auctioned on June 14. The bond sale would be a two-tranche auction, in which the government will put up both its 11-year and 15-year treasury bonds up for bidding. ''The total indicative target for the bonds is Rp 2.5 trillion ($ 263 million),'' Mulia said.

The House has asked government to increase its bonds sales target for this year by Rp 4.1 trillion -- from Rp 43.1 trillion to Rp 47.2 trillion. Rp 2 million will finance post-tsunami reconstruction, while the remaining Rp 2.1 trillion to keep national budget deficit at 0.8 percent of GDP.

Under the 2005 state budget, whose revision the government and the House is expected to agree on this week, the deficit will likely reach Rp 20.3 trillion -- or 0.8 percent of the country's gross domestic product (GDP) -- from a previous Rp 19.5 trillion.

The exact number of money need for Aceh and Nias reconstruction is still conflicting. Last week Head of Rehabiliation and Reconstruction Agency for Aceh and Nias (BRR) Kuntoro Mangkusubroto said the reconstruction need 7 billion dollar (Rp 63 trillion), of which foreign donor will provide $6 billion, and Indonesian government will finance the remaining 1 billion dolar (Rp 9 trillion).

Nasution, as reported by Kompas on Monday, said the reconstruction need Rp 8.8 trillion, while the House members is still talking about Rp 5.4 trillion.

Nasution also revealed, of the Rp 8.8 trillion needed, Rp 3.9 trillion will come from debt moratorium, $ 800 million from ADB and World Bank grant, and addition $50 million from Australian soft loan.