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Investor Meeting Presentation January 2013 Directorate General of - - PowerPoint PPT Presentation

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Investor Meeting Presentation January 2013 Directorate General of Debt Management Ministry of Finance of The Republic of Indonesia www.dmo.or.id Tab able le of of Con ontent tent Government Debt Position Prudent Fiscal Management

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SLIDE 1

Investor Meeting Presentation

January 2013

Directorate General of Debt Management Ministry of Finance of The Republic of Indonesia www.dmo.or.id

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Tab able le of

  • f Con
  • ntent

tent

Government Debt Position Prudent Fiscal Management Preserved Macroeconomic Stability to Support Further Growth

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SLIDE 3

Government Debt Position

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4

Notes: + Provisional as of November 30, 2012

Gov’t. Debt Outstanding 2007-2012

803 906 979 1,064 1,188 1,375 586 730 611 617 621 615

  • 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2007 2008 2009 2010 2011 2012+

Pinjaman/ Loans SBN/ Securities

[ triliun rupiah/ in trillion IDR ]

[ dalam triliun Rupiah dan %/ in trillion IDR and % ] Tahun/ Year Pinjaman/ Loans 586 42% 730 45% 611 38% 617 37% 621 37% 615 31% SBN/ Securities 803 58% 906 55% 979 62% 1,064 63% 1,188 63% 1,375 69% Total Utang Pemerintah Pusat/ Central Govt. Debt Total 1,389 100% 1,637 100% 1,591 100% 1,682 100% 1,809 100% 1,991 100% 2012+ 2010 2009 2007 2011 2008

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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2030 2031 2032 2033 2035 2036 2037 2038 2041 2042 TOTAL 75,35 71,89 77,28 51,77 49,68 69,14 56,80 69,58 60,23 92,20 31,58 18,01 28,02 19,61 44,25 30,82 25,68 27,10 42,80 13,85 15,58 4,11 27,75 35,16 13,55 33,91 SUKUK USD

  • 6,33
  • 9,74
  • 9,74
  • SUKUK IDR

8,78 7,34 18,96

  • 1,17

7,91

  • 0,25
  • 1,21
  • 1,55
  • 2,85
  • 2,18
  • 4,11

6,74

  • SUN JPY
  • 3,87

6,64

  • 6,64
  • SUN USD
  • 22,40

9,74 8,76 9,74 18,50 19,48 19,48 24,35 19,48

  • 15,58
  • 14,61

19,48

  • 21,91

SUN IDR 66,57 35,82 48,58 43,01 38,77 33,00 33,45 43,22 35,88 55,14 31,58 18,01 26,47 19,61 41,40 30,82 23,50 27,10 42,80 13,85

  • 6,40

15,69 13,55 12,00

  • 20,00

40,00 60,00 80,00 100,00

15 76 71 77 52 50 69 57 70 60 92 32 18 28 20 44 30 26 27 43 14 15 4 28 35 47 10 56 56 54 50 44 43 42 41 36 30 25 21 18 15 12 10 9 8 8 8 7 4 2 1 1 1 1 2

  • 20

40 60 80 100 120 140 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040-2055

Pinjaman/ Loans SBN/ Securities

[triliun Rupiah/ in trillion IDR]

Debt Maturity Profile

As of November 30, 2012 As of January 7, 2013

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6

Debt Risk Indicators, 2007 - Q3 2012

26.7 22.9 21.2 20.3 18.8 16.1 30.2 28.2 28.2 26.1 25.9 22.3

2007 2008 2009 2010 2011 Q3-2012

Interest Rate Risk

Variable rate ratio [%] Refixing rate [%] 16.5 17.2 13.4 12.1 10.9 11.0 46.9 52.1 47.4 46.2 45.1 44.8

2007 2008 2009 2010 2011 Q3-2012

Exchange Rate Risk

FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) 10.4 10.0 9.7 9.5 9.3 9.8

2007 2008 2009 2010 2011 Q3-2012

Average Time To Maturity (ATM)-Years

Average Time to Maturity (in percentage) 6.8 6.4 7.6 7.1 8.2 8.3 19.4 18.6 20.3 20.8 22.7 22.3 30.6 31.1 33.2 34.2 34.6 33.7

2007 2008 2009 2010 2011 Q3-2012

Debt Maturing in 1, 3 and 5 Years

Maturity debt portion < 1 year (%) Maturity debt portion < 3 year (%) Maturity debt portion < 5 year (%)

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2006+ 2007+ 2008+ 2009+ 2010+ 2011++ 2012+++ 2013+ Govt Securities - net 36,0 57,2 85,9 99,5 91,1 119,9 159,6 180,4 Domestic Loan

  • 0,3

1,0 0,5 External Loan - net (26,6) (26,6) (18,4) (15,5) (4,57) (19,2) (4,4) (19,5) Others/Non-Debt - net 20,0 9,1 16,5 28,6 5,0 28,3 33,9 (8,1) Budget Defisit, % to GDP 0,9 1,3 0,1 1,6 0,7 1,3 2,2 1,6

0,9 1,3 0,1 1,6 0,7 1,3 2,2 1,6 (0,5)

  • 0,5

1,0 1,5 2,0 2,5

  • 50

50 100 150 200

Financing Trend, 2006 – 2012 Budget Deficit Financing

(trillion IDR)

Notes: + Based on Audited Budget Report ++ Based on Realized Budget 2011 (preliminary figure) +++ Based on Revised Budget 2012

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8

35,2% 33,1% 28,4% 26,1% 24,3% 23,9%

0% 10% 20% 30% 40% 2007 2008 2009 2010 2011 2012*

Debt to GDP Ratio and Debt Service Ratio 2005 – 2012

Debt to GDP Ratio (% of GDP) Debt Service to GDP Ratio (%) Interest Expenses to Revenue and Expenditure Ratio (%) Interest Expenses to Tax Revenue & Central Government Expenditure Ratio (%)

Notes: * Based on Unaudited Budget 2012, Subject to change, as of December 2012 11,28% 9,01% 11,05% 8,88% 7,71% 7,52% 10,53% 8,97% 10,00% 8,48% 7,20% 6,78%

0% 2% 4% 6% 8% 10% 12% 2007 2008 2009 2010 2011 2012* to Revenue to Expenditure

5,0% 4,0% 3,8% 3,4% 3,1% 3,1%

0% 1% 2% 3% 4% 5% 6% 2007 2008 2009 2010 2011 2012*

17,0% 14,2% 15,1% 12,2% 10,7% 10,2% 15,8% 12,8% 14,9% 12,7% 10,6% 10,1%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2007 2008 2009 2010 2011 2012* to Tax Revenue to Central Gov't Expenditure

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9

Gov’t Debt Securities Issuance Plan 2013

Gov’t Debt Operation – Policy Combination

  • Issuing in domestic market will be prioritized
  • Issuing in variety of tenor
  • Issuing in global market (Global Bond and

Samurai Bond)

  • Maximum foreign issuance 14% from total gov’t

debt securities issuance

  • Buyback, debt switching, direct transaction
  • Initiatives strategic :USD issuance domestically &

liability management (USD bonds)

Benchmark Series for 2013

  • FR 66 – 5 Y
  • FR 63 – 10 Y
  • FR 64 – 15 Y
  • FR 65 – 20 Y

Indicative Tenor in Domestic Market

  • 1 y - 13 % *
  • 3 y - 10 % * ^
  • 5 y - 18 % *
  • 10 y - 12 % *
  • 15 y - 12 % *
  • > 20 y - 21 % *

* as percentage of total gross securities issuance in the domestic market ^ Retail bond

IDR (trillion) $ USD (billion) IDR (trillion) $ USD (billion)

Deficit (190,1) (19,52) (153,3) (15,74) Amortization (158,8) (16,31) (159,5) (16,38) External Loan (50) (5) (58) (6) Govt Securities (incl Buyback) (109) (11) (100,9) (10) Domestic Loan (0,14) (0,01) (0,25) (0,03) Non Debt Financing Expenditures (26,62) (2,73) (22,93) (2,35) Two Steps Loan (8,4) (0,87) (7,0) (0,72) Financing Needs (384,0) (39,4) (342,8) (35,2) Financing Sources 384,0 39,4 342,8 35,2 Non Debt (Gross) 60,6 6,22 14,8 1,52 Debt (Gross) 323,4 33,20 328,0 33,67 Govt Securities 268,5 27,6 281,3 28,9 Program Loan 15,6 1,6 6,5 0,7 Project Loan (Bruto) 38,1 3,9 39,4 4,0 Domestic Loan 1,1 0,1 0,8 0,1

Exchange Rate Assumption (IDR/USD 1) a.o January 9, 2013: 9.740 IDR

2012 - Revised Budget 2013 - Budget

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2012-2013 Funding Strategy Progress

2012 - Revised Budget (trillion IDR) % of GDP 2013 - Budget (trillion IDR) % of GDP Total Revenue & Grants 1.358,2 15,9% 1.529,7 16,5%

  • f which

Tax Revenue 1.016,2 11,9% 1.192,99 12,9% Non Tax Revenue 341,14 4,0% 332,20 3,6% Expenditure 1.548,3 18,1% 1.683,0 18,2%

  • f which

Interest payment 117,8 1,4% 113,2 1,2% 0,0% 0,0% Subsidy 245,1 2,9% 317,2 3,4% 0,0% 0,0% Primary Balance (72,3)

  • 0,8%

(40,1)

  • 0,4%

Overall Balance (deficit) (190,1)

  • 2,2%

(153,3)

  • 1,7%

Financing 190,1 2,2% 153,3 1,7% Non Debt (Net) 33,9 0,4% (8,1)

  • 0,1%

Debt 156,2 1,8% 161,5 1,7% 0,0% 0,0% Govt Securities (Net) 159,6 1,9% 180,4 1,9% 0,0% 0,0% Domestic Official Borrowing 1,0 0,0% 0,5 0,0% External Official Borrowing (Net) (4,4)

  • 0,1%

(19,5)

  • 0,2%

Disbursement 53,7 0,6% 45,9 0,5% Program Loan 15,6 0,2% 6,5 0,1% Project Loan (Bruto) 38,1 0,4% 39,4 0,4% On lending (8,4)

  • 0,1%

(7,0)

  • 0,1%

Repayment (49,7)

  • 0,6%

(58,4)

  • 0,6%

Assumptions: GDP (trillion) 8.542,6 9.269,6 Growth (%) 6,5 6,8 Inflation (%) 6,8 4,9 3-months SPN (% avg) 5,0 5,0 Rp / USD (avg) 9.000,0 9.300,0 Oil Price (USD/barrel) 105,0 100,0 Oil Lifting (MBCD) 930,0 900,0 Item

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11

Debt Issuance Program 2013

Calendar of Issuance

11

Month Date Type Tenor (sector) 1) Target (Rp)

January January 15, 2013 ON 5, 10, 20 year SPN 3 month, 1 year January 29, 2013 ON 5, 10, 15 year SPN 1 year February February 5, 2013 PBS 5, 25 year SPN-S 6 month February 12, 2013 ON 10, 15, 20 year SPN 3 month, 1 year February 19, 2013 PBS 5, 25 year February 26, 2013 ON 5, 10, 20 year SPN 1 year March March 5, 2013 PBS 5, 25 year SPN-S 6 month March 13, 2013 ON 5, 10, 15 year SPN 3 month, 1 year March 19, 2013 PBS 5, 25 year March 26, 2013 ON 5, 15, 20 year SPN 1 year April April 2, 2013 PBS 5, 25 year SPN-S 6 month April 9, 2013 ON 5, 10, 20 year SPN 1 year April 16, 2013 PBS 5, 25 year April 23, 2013 ON 10, 15, 20 year SPN 3 month, 1 year April 30, 2013 PBS 5, 25 year SPN-S 6 month May May 6, 2013 ON 5, 15, 20 year SPN 1 year May 14, 2013 PBS 5, 25 year May 21, 2013 ON 10, 15, 20 year SPN 3 month, 1 year May 28, 2012 PBS 5, 25 year SPN-S 6 month

1) Tenor (sector) means that the tenor to be issued will be around the tenor stated in column "Tenor (sector)".

57.500.000.000.000

2) The total of issuance is excluding Sukuk Retail, ORI, Bonds in currencies other than Rupiah, and USD denominated bonds in Domestic market

Month Date Type Tenor (sector) 1) Target (Rp) June June 3, 2013 ON 5, 15, 20 year SPN 3 month, 1 year June 11, 2013 PBS 5, 25 year June 18, 2013 ON 5, 10, 20 year SPN 1 year June 25, 2013 PBS 5, 25 year SPN-S 6 month July July 2, 2013 ON 10, 15, 20 year SPN 3 month, 1 year July 9, 2013 PBS 5, 25 year SPN-S 6 month July 16, 2013 ON 5, 15, 20 year SPN 1 year July 23, 2013 PBS 5, 25 year SPN-S 6 month July 30, 2013 ON 5, 10, 20 year SPN 3 month, 1 year August August 20, 2013 PBS 5, 25 year SPN-S 6 month August 27, 2013 ON 5, 10, 20 year SPN 1 year September September 3, 2013 PBS 5, 25 year SPN-S 6 month September 10, 2013 ON 10, 15, 20 year SPN 3 month, 1 year September 17, 2013 PBS 5, 25 year SPN-S 6 month September 24, 2013 ON 5, 10, 15 year SPN 1 year October October 1, 2013 PBS 5, 25 year SPN-S 6 month October 8, 2013 ON 5, 15, 20 year SPN 3 month, 1 year October 22, 2013 ON 5, 10, 15 year SPN 1 year October 29, 2013 PBS 5, 25 year SPN-S 6 month November November 6, 2013 ON 10, 15, 20 year SPN 3 month, 1 year November 12, 2013 PBS 5, 25 year SPN-S 6 month November 19, 2013 ON 5, 10, 15 year SPN 1 year November 26, 2013 PBS 5, 25 year SPN-S 6 month December December 3, 2013 ON 5, 10, 20 year SPN 3 month, 1 year
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Domestic Market is Arising

The amount of incoming bids for long tenor bonds from local institutional buyers (pension funds, insurance companies and mutual funds) has improved significantly in recent auctions

Others : Domestic pension funds, insurance companies and mutual funds

Increasing demand in domestic primary market align with downward trend in borrowing cost

12

24% 14% 19% 29% 35% 24% 33% 24% 35% 37% 23% 52% 48% 51% 45% 45% 51% 51% 32% 41% 49% 59%

24% 38% 30% 26% 20% 24% 16% 44% 24% 14% 17%

Foreign Local Bank & Central Bank Others Incoming Bid - Long Tenor (≥ 10 years)

24,60 53,98 48,73 95,57 189,46 136,18 198,23 315,91 393,41 430,59

11,71 23,57 22,54 39,30 70,78 66,06 79,20 101,90 138,85 152,77

11,92 10,42 13,97 10,14 10,01 11,86 10,04 7,57 5,96 5,30

3 6 9 12 15

  • 100

200 300 400 500

2003 2004 2005 2006 2007 2008 2009 2010 2011

  • ao. Dec 3,

2012

Total Incoming Bid Total Bid Accepted Yeild at Tenor 10 year

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Government Debt Securities Auction in 2012

27,7 50,1 42,4 22,3 10,6 14,1 19,5 14,8 14,7 13,3 14,2 13,3 16,5 27,7 20,0 8,5 14,1 11,9 18,8 18,0 28,9 9,2 10,0 10,5 12,0 12,0 1,6 7,3 9,0 2,2 7,6 0,8 7,5 6,9 7,0 9,0 9,0

  • 6,2 5,3

7,5 9,0 7,5 1,2 0

4 8 12 16 20 11 22 33 44 55

10 Jan 26-Jan 7-Feb 21-Feb 6-Mar 20-Mar 3-Apr 17-Apr 2-May 14-May 5-Jun 19-Jun 3-Jul 17-Jul 9-Aug 28-Aug 11-Sep 25-Sep 4-Oct 23-Oct 12-Nov 3-Dec

Incoming Bids Awarded Bids Bid to cover [RHS]

IDR Trillion

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14

2,00 4,00 6,00 8,00 10,00 12,00 14,00 16,00 18,00 20,00 22,00

Apr'08 Jul'08 Okt'08 Jan'09 Apr'09 Jul'09 Okt'09 Jan'10 Apr'10 Jul'10 Okt'10 Jan'11 Apr'11 Jul'11 Okt'11 Jan'12 Apr'12 Jul'12 Okt'12 Jan'13

5Y 10Y 15Y 20Y

Global Financial Crisis

Eurozone sovereign debt crisis

Secondary Market Performance of Government Bonds

Average daily trading Yield of Benchmark Series

Average daily trading significantly increased, while yield on benchmark series steadily decreased

[In Percentage]

As of Jan 8, 2013

14

3.307 5.899 4.235 3.420 4.963 7.671 9.511 8.259 10.912 7.415 5.767 6.566 8.794 9.711 13.324 10.458 9.907 12.074 10.942 8.007

  • 80

160 240 320 400 480 560 640 720

  • 2.000

4.000 6.000 8.000 10.000 12.000 14.000

2006 2007 2008 2009 2010 2011 2012 Jan '12 Feb '12 Mar '12 Apr'12 May'12 Jun'12 Jul'12 Aug'12 Sep'12 Okt'12 Nov'12 Des'12 8 Jan '13

Volume (billion rupiah) - LHS Frequency - RHS

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Des-08 Banks 258,75 49,2% 254,36 43,72% 217,27 33,88% 265,03 36,63% 299,66 36,73% 300,65 36,73% Govt Institutions 23,01 4,4% 22,50 3,87% 17,42 2,72% 7,84 1,08% 3,07 0,37% 0,80 0,10% Non-Banks 243,93 46,4% 304,89 52,41% 406,53 63,40% 450,75 62,29% 517,53 63,09% 517,82 63,21% Mutual Funds 33,11 6,3% 45,22 7,77% 51,16 7,98% 47,22 6,53% 43,19 5,27% 42,91 5,24% Insurance Company 55,83 10,6% 72,58 12,48% 79,30 12,37% 93,09 12,86% 83,42 10,17% 83,49 10,19% Foreign Holders 87,61 16,7% 108,00 18,56% 195,76 30,53% 222,86 30,80% 270,52 32,98% 271,20 33,10% Insurance 0,03 0,0% 0,06 0,01% 1,35 0,21% 2,94 0,41% 3,59 0,44% 3,59 0,44% Pension Fund 0,17 0,0% 1,23 0,21% 2,31 0,36% 2,76 0,38% 4,40 0,54% 4,47 0,55% Corporate 0,69 0,1% 3,66 0,63% 5,71 0,89% 6,59 0,91% 10,78 1,31% 10,77 1,31%

  • Fin. Institutions

83,38 15,9% 78,41 13,48% 126,69 19,76% 133,63 18,47% 159,09 19,39% 158,54 19,35% Individual 0,06 0,0% 0,06 0,01% 0,10 0,02% 0,09 0,01% 0,10 0,01% 0,10 0,01% Mutual Fund 0,49 0,1% 21,53 3,70% 53,53 8,35% 68,30 9,44% 70,09 8,55% 70,03 8,55% Securities 2,67 0,5% 2,65 0,45% 4,34 0,68% 4,88 0,67% 5,56 0,68% 5,51 0,67% Foundation 0,07 0,01% 0,06 0,01% 0,07 0,01% 0,06 0,01% Others 0,11 0,0% 0,39 0,07% 1,64 0,26% 3,60 0,50% 16,84 2,05% 18,14 2,21% Pension Fund 32,98 6,3% 37,50 6,45% 36,75 5,73% 34,39 4,75% 56,46 6,88% 56,37 6,88% Securities Company 0,53 0,1% 0,46 0,08% 0,13 0,02% 0,14 0,02% 0,30 0,04% 0,30 0,04% Others 33,87 6,4% 41,12 7,07% 43,43 6,77% 53,05 7,33% 63,64 7,76% 63,55 7,76% Total 525,69 100% 581,75 100% 641,21 100% 723,61 100% 820,27 100% 819,27 100% 08-Jan-13 Dec-11 Dec-10 Dec-12 Dec-09

Ownership of Tradable Government Securities

In IDR Trillion

Domestic financial institutions are picking up in size, however demand for Gov’t bonds from foreign investors keep growing above the demand from financial institutions. 15

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SLIDE 16

16

4,56 8,06 13,11 (8,99) (2,27) 4,15 (4,37) (0,08) 10,13 (1,41) 7,83 9,35 19,52 0,68 0,68

(0,06) (0,04) (0,02) 0,00 0,02 0,04 0,06 0,08 0,10 (15,00) (10,00) (5,00) 0,00 5,00 10,00 15,00 20,00 25,00

Dec-10 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 08-Jan-13

Capital Inflows Capital Inflows of Average of Foreign Holder

Foreign Investor Activity

Net Buyer (Seller) - Non Resident Foreign Ownership - Proportion by Tenor

Source: Ministry of Finance

Foreign investors mostly dominated by high quality long term investors

In IDR Trillion

2% 4% 10% 12% 8% 8% 5% 5% 5%

8%

3% 3%

23% 20% 18% 17% 16% 17%

17% 22% 21% 25% 28% 28%

53% 49% 46% 38% 45% 45% 17% 19% 30,53% 30,80% 32,98% 33,10% 0% 20% 40%

0% 20% 40% 60% 80% 100%

Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 8-Jan-13

>10 >5-10 >2-5 >1-2 0-1 % Foreign Ownership to Total (RHS)

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SLIDE 17

17

200 400 600 800 1000 1200 1400 1600

2 4 6 8 10 12 14 16

Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13

Yield - 10 y Global Bond CDS 10 y (RHS)

  • 200

400 600 800 1.000 1.200 1.400 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Indonesia Phillipine Turkey

Global Bonds Issuance Result (10 – year) & Yield Secondary Market

Cost of 10 y global bonds is declining, along side its spread over treasury

Source : Bloomberg

36% 53% 40% 30% 24% 19% 30% 24% 29% 37% 66% 35% 29% 28% 31% 21% 29% 47% 20% 27% 22% 12% 17% 31% 35% 18% 29% 49% 47% 34% 50% 49% 49% 51% 17% 34% 0% 20% 40% 60% 80% 100%

INDO-14 INDO-15 INDO-16 INDO-17 Indo-18 INDO-18 (Reopening) Indo-19 Indo- 20 INDO-21 R10142 R10422 R10142 (Reopening) 2004 2005 2006 2008 2009 2010 2011 2012

Asia Europe USA

As of January 4, 2013

10Y CDS (as of Jan 4, 2013)

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SLIDE 18

18

Government Securities Profile

  • Since October 2006, Government and Central Bank committed to replace interest payment of Promissory Notes to Bank Indonesia (SU-

002 & SU-004) with new bond (SU-007) and omitted indexation of SU-002 & SU-004

GOVERNMENT DEBT SECURITIES (GDS) Des '07 Des '08 Dec-09 Dec-10 Dec-11 May-12 Oct-12 Nov-12 28-Dec-12 7-Jan-13

  • 1. Domestic Tradable GDS

IDR 477.747 IDR 520.995 IDR 570.215 IDR 615.498 IDR 684.618 IDR 721.522 IDR 770.974 IDR 771.516 IDR 757.231 IDR 756.231

  • a. Zero Coupon

IDR 14.669 IDR 21.503 IDR 33.386 IDR 32.307 IDR 32.412 IDR 33.212 IDR 28.332 IDR 23.883 IDR 24.083 IDR 23.083

  • 1. Government Treasury Bills

IDR 4.169 IDR 10.012 IDR 24.700 IDR 29.795 IDR 29.900 IDR 30.700 IDR 25.820 IDR 22.620 IDR 22.820 IDR 21.820

  • 2. Zero Coupon Bond

IDR 10.500 IDR 11.491 IDR 8.686 IDR 2.512 IDR 2.512 IDR 2.512 IDR 2.512 IDR 1.263 IDR 1.263 IDR 1.263

  • b. Government Domestic Bonds

IDR 463.078 IDR 499.492 IDR 536.829 IDR 583.191 IDR 652.206 IDR 688.310 IDR 742.642 IDR 747.633 IDR 733.148 IDR 733.148

  • 1. Fixed Rate *) +)

IDR 294.453 IDR 353.558 IDR 393.543 IDR 440.396 IDR 517.142 IDR 553.247 IDR 619.887 IDR 624.879 IDR 610.393 IDR 610.393

  • 2. Variable Rate *)

IDR 168.625 IDR 145.934 IDR 143.286 IDR 142.795 IDR 135.063 IDR 135.063 IDR 122.755 IDR 122.755 IDR 122.755 IDR 122.755

  • 2. Promissory Notes to Bank Indonesia **) ***)

IDR 259.404 IDR 258.160 IDR 251.875 IDR 248.432 IDR 244.636 IDR 243.463 IDR 241.056 IDR 241.056 IDR 240.144 IDR 240.144

  • 3. Total GDS (2+3)

IDR 737.151 IDR 779.155 IDR 822.090 IDR 863.930 IDR 929.254 IDR 964.985 IDR 1.012.030 IDR 1.012.572 IDR 997.376 IDR 996.376

  • 4. Total Government International Bonds *)

USD 7.000 USD 11.200 USD 14.200 USD 16.200 USD 18.700 USD 22.950 USD 22.950 USD 22.950 USD 22.950 USD 22.950 35.000 ¥ 95.000 ¥ 95.000 ¥ 95.000 ¥ 95.000 ¥ 155.000 ¥ 155.000 ¥ 155.001 ¥

  • 5. TOTAL GOV'T DEBT SECURITIES (3+(4*Exchange Rate Assumption))

IDR 803.084 IDR 901.795 IDR 959.130 IDR 1.020.062 IDR 1.109.922 IDR 1.196.036 IDR 1.244.179 IDR 1.251.055 IDR 1.236.658 IDR 1.237.004 GOVERNMENT ISLAMIC DEBT SECURITIES (GIDS)

  • 6. Domestic Tradable GIDS

IDR 4.700 IDR 11.533 IDR 25.717 IDR 38.988 IDR 58.753 IDR 63.027 IDR 63.035 IDR 63.035 IDR 63.035

  • a. Fixed Rate *)++)

IDR 4.700 IDR 11.533 IDR 25.717 IDR 37.668 IDR 57.568 IDR 61.927 IDR 62.840 IDR 62.840 IDR 62.840

  • b. Zero Coupon

IDR 1.320 IDR 1.185 IDR 1.100 IDR 195 IDR 195 IDR 195

  • 7. Domestic Non Tradable GIDS

IDR 2.686 IDR 12.783 IDR 23.783 IDR 33.783 IDR 35.783 IDR 35.783 IDR 35.783 IDR 35.783

  • 8. Government International Islamic Bonds
  • 1. Fixed Rate *)

USD 650 USD 650 USD 1.650 USD 1.650 USD 1.650 USD 2.650 USD 2.650 USD 2.650

  • 9. TOTAL GOV'T DEBT SECURITIES (6+(8*Exchange Rate Assumption))

IDR - IDR 4.700 IDR 17.643 IDR 31.561 IDR 53.950 IDR 74.535 IDR 78.892 IDR 88.488 IDR 88.660 IDR 88.840

  • 10. TOTAL GOVERNMENT SECURITIES

IDR 803.084 IDR 906.495 IDR 979.458 IDR 1.064.406 IDR 1.187.655 IDR 1.304.354 IDR 1.358.854 IDR 1.375.326 IDR 1.361.101 IDR 1.361.628 Notes:

  • Nominal in billion rupiah (domestic bonds), million USD & million JPY (international bonds)
  • *) Tradable
  • **) Non-Tradable
  • +) Including ORI (IDR Billion))

IDR 18.885 IDR 34.699 IDR 40.149 IDR 40.672 IDR 51.672 IDR 29.775 IDR 42.451 IDR 42.451 IDR 42.451 IDR 42.451

  • ++) Including Sukuk Ritel/SR (IDR Billion)

IDR 5.556 IDR 13.590 IDR 20.931 IDR 28.989 IDR 28.989 IDR 28.989 IDR 28.989 IDR 28.989

  • Exchange Rate Assumption (IDR/USD1)

IDR 9.419 IDR 10.950 IDR 9.400 IDR 8.991 IDR 9.068 IDR 9.565 IDR 9.615 IDR 9.605 IDR 9.670 IDR 9.738

  • Exchange Rate Assumption (IDR/JPY1)

IDR 101,70 IDR 110,29 IDR 116,80 IDR 121,41 IDR 120,90 IDR 116,44 IDR 111,97 IDR 110,59

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19

  • 2.0

4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y10Y 15Y 20Y 30Y

9 Jan '13 2 Jan '13 23 Sep '11 7 May '10 27 Oct '08 13 Sep'05 [in percentage]

Sources: IDMA, Bloomberg

Yield Curve of Government Securities (IDMA/Himdasun)

Tenor 9-Jan-13 2-Jan-13 23-Sep-11 7-May-10 27-Oct-08 13 Sep'05 1Y 3.91 4.07 5.29 6.64 19.37 2Y 4.36 4.44 6.01 7.10 17.35 14.59 3Y 4.48 4.55 6.13 7.45 19.93 4Y 4.58 4.67 6.54 8.03 17.17 14.14 5Y 4.50 4.75 6.69 8.77 17.46 14.96 6Y 4.80 4.86 6.81 8.93 17.05 15.24 7Y 4.99 4.99 7.08 9.03 17.06 16.17 10Y 5.08 5.14 7.43 9.29 20.91 15.75 15Y 5.80 5.88 7.83 9.89 16.65 14.12 20Y 6.13 6.23 8.20 10.46 20.27 30Y 6.35 6.34 8.29 10.55 20.37

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20

Implementing Crisis Management Protocol

1

Implementing Bond Stabilization Framework

2

Enhancing coordination between government institutions and continuous dialogue with market participants

3

Pre-emptive measures

Buyback of government bonds by the DMO from the state budget Potential purchase of government bonds by State Owned Enterprises

Purchase of government bonds by the Treasury office Purchase of government bonds by the DMO from accumulated cash surplus

Specific policies in place to address crisis enacted in the 2012 budget law

4

Swap facility arrangements based on international cooperation

5

1. Indicators to determine crisis level of Government Securities Market condition (normal, aware, alert, crisis) 2. There are some indicators that are monitored:

a. Benchmark yield on Government securities b. Exchange rate c. Jakarta Composite Index (JCI) d. Foreign ownership in Government securities

3. Policies to address the crisis at every level:

a. Re-purchase Gov. securities at secondary market b. Postpone or stop the issuance of Govt. securities

Bond Stabilization Framework Crisis Management Protocol

Policies to Address and Mitigate Sudden Reversal

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21

R&I – 18 October 2012 “With the global economy slowing down, Indonesia maintains relatively high economic growth. Its fiscal management remains conservative, and the government’s debt burden is kept low. The financial system has also become more stable. Greater trust in its economy has led to an increase in foreign investment, and reinforcement of the industrial bas has been progressing gradually .”

Mar-99 Nov-99 Jul-00 Feb-01 Oct-01 Jun-02 Jan-03 Sep-03 Apr-04 Dec-04 Aug-05 Mar-06 Nov-06 Jul-07 Feb-08 Oct-08 May-09 Jan-10 Sep-10 Apr-11 Dec-11

Moody's S&P Fitch

Indonesia’s credit ratings

Solid economic fundamentals have been supporting the improvement of Indonesia’s sovereign credit ratings since 2001

Rating agencies comments

International rating agencies are recognising the improvements in the Indonesian economy

B3/B-/B- B2/B/B B1/B+/B+ Ba3/BB-/BB- Ba2/BB/BB Ba1/BB+/BB+ Baa3/BBB-/BBB-

Investment grade

Rating history

CCC+/CCC+/Caa1 CCC/CCC/Caa2 Positive outlook Negative outlook Stable outlook Positive Watch Source: Moody’s, Fitch, S&P Moody’s – 18 January 2012 “Indonesia‘s cyclical resilience to large external shocks points to sustainably high trend growth…Economic strength is underpinned by gains in investment spending, improved prospects for infrastructure development following key policy reforms, and a well-managed financial system.”

Baa3 / Stable

Fitch – 15 December 2011 “The rationale behind the upgrade is improved economic performance, strengthened external liquidity, low and declining public debt ratios, and a prudent overall macro policy framework. Rapid progress in tackling structural weaknesses combined with sustained economic growth in line with or better than Fitch’s projections without a build-up of external imbalances or a severe inflation shock would enhance Indonesia’s economic and sovereign credit fundamentals and exert upward pressure on the rating.”

BBB- / Stable

JCR – 24 August 2011 “The ratings reflect (i) the country’s sustainable economic growth outlook underpinned by solid domestic demand, (ii) alleviated public debt burden brought by prudent fiscal management, (iii) reinforced resilience to external shocks stemming from accumulated foreign exchange reserves and an improved external debt management capacity.…”

BBB- / Stable BBB- / Stable

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SLIDE 22

Prudent Fiscal Management

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23

2012 Budget Highlights – 2013 Budget Preview

Revised 2012 and proposed 2013 state budget

Manageable 2012 budget deficit of US$21.1 billion or 2.23% of GDP, 1.65% of GDP in 2013

2013 GDP growth forecast by expenditure Private consumption: 4.9% Public consumption: 6.7% Investment: 11.9% Sectoral growth targets for 2013 Manufacturing industry: 6.5% Agriculture, livestock, forestry and fisheries: 3.7% Trade, hotels and restaurants: 8.9% Mining and quarrying: 2.8% Development targets for 2013 Open unemployment rate: 5.8% – 6.1% People living below poverty line: 9.5%– 10.5%

Source: Ministry of Finance Note: IDR/US. exchange rate of 9,000 (for revised budget 2012) and 9,300 (for proposed budget 2013), US dollar values are for convenience only.

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24

2012 Budget Realization

Revised Budget (APBNP) Semester I Realization % of APBNP Revised Budget (APBNP) Semester I Realization % of APBNP

  • A. STATE REVENUES & GRANTS

1,169.9 497.0 42.5 1,358.2 593.3 43.7

  • I. DOMESTIC REVENUES

1,165.3 496.9 42.6 1,357.4 592.6 43.7

  • 1. Tax Revenues

878.7 387.6 44.1 1,016.2 456.8 44.9 Tax Ratio (% of GDP) 12.16 10.84

  • 11.90

11.51 96.80

  • 2. Non Tax Revenues

286.6 109.3 38.2 341.1 135.8 39.8

  • II. GRANTS

4.7 0.1 2.5 0.8 0.8 91.0 1,320.8 442.3 33.5 1,548.3 629.4 40.7

  • I. CENTRAL GOVT EXPENDITURES

908.2 259.8 28.6 1,069.5 393.9 36.8

  • II. TRANSFER TO REGIONS

412.5 182.5 44.3 478.8 235.5 49.2 (44.3) 101.4 (229.2) (72.3) 13.5 (18.7) (150.8) 54.7 (36.3) (190.1) (36.1) 19.0 Deficit of GDP (%) (2.09)

  • (2.23)

(0.91)

  • 150.8

62.4 41.4 190.1 101.6 53.5

  • I. FOREIGN FINANCING

153.6 78.9 51.3 194.5 120.9 62.1

  • II. DOMESTIC FINANCING (nett)

(2.8) (16.5) 592.5 (4.4) (19.2) 434.8 SURPLUS/(DEFICIT) of FINANCING 0.0 117.1

  • 0.0

65.5

  • D. SURPLUS/(DEFICIT) (A-B)
  • E. FINANCING (I+II)

ITEMS 2011 2012

  • B. STATE EXPENDITURES
  • C. PRIMARY BALANCE
  • In the 1st semester 2012, budget deficit stood at Rp36,1 T, however there is surplus financing (SILPA) of Rp65,5T.
  • 1st Semester 2012 budget realization, State revenues & grants realization was 40,7% or higher than previous year
  • realization. Budget disbursement was also better than previous year

IDR Trillion

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SLIDE 25

Preserved Macroeconomic Stability to Support Further Growth

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26

The Inflation Remains Under Control

  • Inflation remained subdued in September 2012. CPI inflation in September 2012 was recorded at

0.01% (mtm) or 4.31% (yoy), while administered, volatile food and core inflation recorded at 2.74%(yoy), 6.71%(yoy) and 4.12% (yoy). Core inflation charted at low level as demand soften after Eid al- Fitr festivities and correction in the global commodity prices, as well as well-anchored inflation expectation. Meanwhile, sharp correction in the global food prices, adequate food supply, and intensive measures by the government to manage food prices was the key behind the lower volatile food inflation. Going forward, inflation is expected to remain contained and stay within its target range of 4.5% ± 1% in 2012 and 2013.

Inflation – by component

Source: Bank Indonesia

5.78% 4.40% 2.70% 4.32%

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27

Source: Bank Indonesia

Balance of Payments Q2/2012

  • Balance of Payment in Q3-2012 is expected to improve and turn to surplus, supported by better current

account as well as higher surplus in capital and financial account. In line with previous forecast, current account deficit is expected to be lower than that in Q2-2012 due to the trade balance improvement in August 2012. Meanwhile, surplus in the capital and financial account is expected to pick up, driven by favorable portfolio inflow and Foreign Direct Investment. At the end of September 2012, international reserves reached USD110.2 billion, or equivalent to 6.1 months of imports and government’s external debt services.

Balance of Payments

30 60 90 120 150

  • 10
  • 5

5 10 15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* Q3** 2008 2009 2010 2011* 2012 Cap & Fin. Account

  • Curr. Account

Overall Balance Reserves Assets (RHS) billion USD billion USD

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28

Exchange Rate

  • Rupiah in September 2012 moved according to market condition, with abated depreciating
  • pressure. This is consistent with Bank Indonesia’s policy to stabilize rupiah, as suggested by its
  • fundamental. On point-to-point basis, Rupiah depreciated by 0.37% (mtm) to Rp9,570 per USD, or on

average depreciated by 0.64% (mtm) to Rp9,554 per USD. Pressure on Rupiah was mainly associated with strong imports that lead to high demand for foreign currency. Pressure on Rupiah was subdued as measures to boost global economy and the prospects of the Indonesia’s economy have attracted more capital inflow to Indonesia. Rupiah Exchange Rate Quarterly Appre/Depr.

Source: Bank Indonesia.

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SLIDE 29

Th Thank ank You You

Directorate General of Debt Management Ministry of Finance of The Republic of Indonesia www.dmo.or.id