Indonesia’s Finance Minister, Suahasil Nazara, said global economic conditions are not conducive for regional governments to issue bonds, responding to plans including a regional bond issuance by the DKI Jakarta provincial government.
Yields already climbing
“Issuing bonds must be continuously assessed against the prevailing conditions; currently the global situation is not good,” Nazara said. He noted that central government bonds have already seen interest rates rise, adding that this “must be a concern for everyone intending to issue bonds.”
Indonesia’s 10-year central government bond yield stands at 7.7 percent, the highest level since May 2020. Nazara said the government has offered regional governments financing options sourced from the state budget, and that communication with the Jakarta provincial government had already begun.
Jakarta’s expanding plan
Jakarta had announced plans to issue regional bonds in June 2027, timed to coincide with the city’s 500th anniversary. If realised, Jakarta would become the first regional government in Indonesia to issue regional bonds. The originally planned issuance size of 3.5 trillion rupiah is now projected to rise to 5.2 trillion rupiah.
Proceeds would go toward infrastructure, transport, education, hospitals and flood control.
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World Bank involvement
The World Bank Group has been engaged to support the plan. Elena Bourganskaia, Vice President Strategy and Operations Support at the World Bank Group, said the institution can help with structuring and advice. “I think this will be a good signal for Jakarta, and also a good signal for Indonesia,” she said.
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