Indonesia Government Debt Profile Per May 2010 English Edition

8/9/2019 Indonesia Government Debt Profile Per May 2010 English Edition

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May 2010 Edition


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Table of Contents

Chapter 1

Background, Debt Policy & Management and itsObjectives, Debt Instruments, Legal Basis

13. Program Loans, 2010

14. Foreign Loans Financing 2000-2010

15. Project & Program Loans Drawing, 2005-2009

2. Background (2)3. Debt Policy & Management and its Objectives

4. Debt Instruments (1)

. ,

17. Project Loans Drawing, 2010 (chart)Chapter 3

Debt Portfolio Outstanding, Debt Maturity Profile,5. Debt Instruments (2)

6. Debt Management: Legal Basis

Chapter 2State Bud et Deficit and its Financin

Government Securities Development and ForeignLoans18. Government Debt Outstanding, 2001-2010

19. Trend of Government Debt Outstanding, 1998-

7. State Budget, fiscal year 2010

8. Fiscal deficit and State Budget Financing, 1996-2010

20. Debt Maturity Profile as of April 30th, 201021. Government Securities, December 2007 April

30th, 201022. Foreign Loans by Creditor Types, 1998-2010

. ,

2007-2010

10. Financing Development, 2005-2010

11. Debt Financing Development, 1998-2010

. ore gn oans y re or ypes, -24. Foreign Loans by Sector, 2005-201025. Foreign Loans by Sector, 2005-2010 (chart)26. Government Debt by Currency, 2001-201027. Government Debt b Currenc 2000-2010

Ministry of Finance Republikc of Indonesia

12. Realization of Government Securities, 2010 28. Foreign Loans Drawing by Financing Type, 2005-2010


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Table of Contents

Chapter 4

Debt Managements Performance Debt PerformanceMeasurement and Comparison, Loan Disbursement,Government Debt Securities Re-profiling

40. Debt Service to International Reserve Ratio,1999-2009

41. Debt-to-GDP Ratio: Countries Comparison in2008 and 2003-2008

29. Debt-to-GDP Ratio, 1998-2010

30. Debt-to-GDP Ratio Countries Comparison,1998-2007

- - -

42. External Debt to GDP Ratio in 2008 and 2003-2008

43. Debt per capita in Various Countries, 2001-2007

2014

32. Maturity Profile of Tradable Government

Securities, end of 2001 and April 30th, 2010

44. Debt per capita: Countries Comparison in 2008and 2003-2008

45. Debt to revenue ratio: Countries Comparison in2008 and 2003-2008

34. Debt Swap to Reduce Debt

35. Restructurisation 2003

36. Restructurisation 2006

46. Interest payment to GDP ratio in VariousCountries, 1998-2007

37. Restructurisation 2008: interest structurerestructurisation SU-002 & SU-004

38. Foreign Loans Disbursement Performance, 1997 April 30th, 2010

Departemen Keuangan Republik Indonesia

39. External Debt Service: Countries Comparison in2008 and 2003-2008



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Table of Contents

Chapter 5

Costs of Borrowing Cost of Fund, Yield Curve,External Debts Costs

47. Interest to revenue and expense ratio, 2000-

56. Govt. Domestic Securities Ownership Structureby Investor Types

57. Govt. Domestic Securities Ownership share byInvestor Types

2010

48. Interest to Total Debt ratio, 2000-2010

49. Interest payment to revenue ratio in SelectedCountries, in 2008 and 2003-2008

58. Govt. Securities Ownership by foreign investor

classified by maturity

59. Spread over 5 years US Treasury Bill

50. Interest Payment Realization 2002-2010

51. Program Loans: Cost Structure

52. Cost of Fund of Government Securities, Rupiahdenominated

.

61. Spread over 30 years US Treasury Bill

Chapter 7

Rat ing, Supreme Audi t Agency Opinion, HIPICs and

53. Yield Curve Trend of Govt. Debt Securities,foreign currency denominated

Chapter 6

onc us on

62. Indonesian Credit Rating

63. Indonesian Credit Rating Development (1)

64. Indonesian Credit Rating Development (2)

. Trading Volume, Govt. Securities OwnershipStructure

54. Average Daily Trading of Rp denominated Govt.

65. Indonesian Sovereign Rating PerformanceUpgrading

66. Supreme Audit Agency Opinion onGovernments Financial Report 2008


55. Govt. Securities Ownership Structure by Bank

and Non Bank, as of 26 March 2010

67. GDP per capita of HIPICs and Debt-reliefCountries

68. ConclusionMinistry of Finance Republikc of Indonesia


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ap erBackground, Debt Policy & Management and

, ,

Departemen Keuangan Republik IndonesiaMinistry of Finance Republikc of Indonesia


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Background (1)

Debt management and policy is an integral part of fiscalpolicy which also constructs economic policy and

.

Ultimate objectives of economic management:

Reducing unemployment.

Poverty alleviation.Spur more growth in the eonomy.

Security and stability enhancement.

e s ma er a ze s a e u ge s n e c .

1Departemen Keuangan Republik IndonesiaMinistry of Finance Republikc of Indonesia


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Background (2)

Deficit financing through debt has been perceived to be a standard approach in most of the countries inour modern world:

Debt is primary tool to fill fiscal gap and to refinance matured debts;

Debt refinancing will end up with new and better debt profile in term of risk and fee.

Government debt, in nominal term, has increased due to:

Legacy debts that need to be refinanced; Inevitable effect of currency and banking crises in 1997/1998:

Exchange rate depreciation;

Banking bail out and recapitalization;

Part of proceed coming from asset recovery used for debt/banking recap securities repayment.

Fiscal deficit financing is also a result of political process and of political decision made in joint by

the Government and the Parliament intended for:uppor ng sca s mu roug eve opmen ac v y n n ras ruc ure, agr cu ure, energy, an ano er n

of pump priming project;

Sustaining peoples welfare program such as PNPM, BOS, Jamkesmas, Raskin, PKH, subsidy;

Supporting real sectors activity for instance through tax incentive;

Maintaining 20% of state budget to back up education sector;

Enhancing army and defense system; Continuing bureaucratic reform.

Access to soft loans coming from multilateral donors has been restricted by:

Indonesia is no longer considered as low income country;

2

Upper limit of foreign loans can be received by an economy.



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Debt Policy & Management and its Objectives

ObjectiveIn the long run, debt policy and management are directed to minimize cost and maintain manageablelevel of risk.

Policy There is no such thing as conditionality imposed by donors;

From 2004 onward, loan repayment has been set to be larger than its disbursement;

Relying more on government securities in domestic currency and market:

Self reliance principle in fiscal deficit financing;ursu ng urt er eepen ng n omest c mar et y en arg ng potent a nvestor an vers y ng

instrument;

Help to spur efficiency in liquidity management by, for instance, issuance of money marketinstrument.

, ,strengthen Governments bargaining power in its role as a Borrower



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Debt Instruments (1)

Government Loan consists of external and domestic debt: Ext ernal Loan

World Bank, Asian Development Bank, Islamic Development Bank and bilateral, , , . .

Program Loan:Intended for budget support and its disbursement is a function of the realization ofstated policy matrix aiming the targets set up in MDGs scheme (poverty alleviation,

, ,related with climate change and infrastructure development.

Proj ect Loan:

To support infrastructure project in transportation, energy etc and also povertyalleviation ro ect.

Domest ic Loan

Government Regulation No. 2 Year 2006 on Loan/Grant Procurement Procedure andLoan/Grant Channelin ;

Coming from state-owned enterprise, local government and local state-ownedenterprise;

To finance policy related with the effort to support local industry, infrastructure

4Departemen Keuangan Republik Indonesia

.



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Debt Instruments (2)

Government securities (SBN) in local and foreign currencydenominated, tradable and non-tradable, fixed and

Government Debt Securi t ies/Surat Ut ang Negara (SUN) T-Bills: short-term (up to 1 year);

.

Coupon Bond

Tradable: ORI, FR/VR bond, Global bondNon tradable: SRBI for bank reca bond issued for BankIndonesias recap and re-structurization of banking industry

Zero coupon

Government Islamic securi t ies/Sukuk (SBSN) in domest ic and f oreign

cur rency denominat ed in t he scheme of Ijarah, Musyarakah, Istisna,etc Islamic T-Bills;


.



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Debt Management: Legal Basis

Laws and Regulations:

Law Number 19/2008 on Government Islamic Securities

aw um er on overnment ecurities

Government Regulation No. 2 Year 2006 on Loan/Grant ProcurementProcedure and Loan/Grant Channeling

Setting up, among other things, good governance principle:

Foreign debt cannot be separated from state budget and subject to

A good policy coordination (MoF, Ministry of Planning & BI) is essentialfor having sound debt management

activities in secondary market by the stock market authority

Accountability and transparency in whole range of debt management



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State Budget, Deficit and Its

Financin



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Fiscal Deficit and State Budget Financing, 1996-2010

9

10

11

180

200

220

[ % to PDB ][ Trillion IDR ]

Since 2005, government securities have been played role as primaryinstrument of financing

87

134

5

67

8

100

120140

160government securities in 2005-2010

- - - - - - 7

23

36

57

86

99

108

21 2

9

1

0

1

0

7

1

1

14

6

30

19

38

42

20

9

17

43

25

16

44

16

40

24

35

24

14

29

50

4

.

1.2

2.4

1.3

1.7

1.1 0.5 0.9 1.3

1.62.1

1

2

3

20

40

60

(2)

(3)

(4)

(4)

(28)

(10)

(27)

(24)

(18)

(17)

(6)

(11) (

5)

(1)

(10)(15)

. . . .

(2)

(1)

-

(40)

(20)

-

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009++ 2010+++

Govt. Securities - net Loans - net Non-Debt - net Deficit (Surplus) APBN Deficit APBN, % to PDB (RHS)

Notes:

Source: MoF

8Departemen Keuangan Republik IndonesiaDepartemen Keuangan Republik Indonesia

a e u ge - use - u e gures+ State Budget (Realization) 2009++ State Budget (Revision) 2010



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Global Deficit and Deficit in Various Countries, 2007-2010

(% to GDP)

2007 2008 2009 2010

Global (0.7) (2.6) (8.1) (6.4)

Developed (1.0) (3.1) (9.3) (7.4)

US (1.2) (3.2) (10.6) (8.3)Japan (2.5) (6.4) (13.5) (6.7)

Euro Area (0.6) (1.9) (5.7) (6.3)

UK (2.6) (6.2) (13.0) (13.1)

Emer in Market 0.5 0.8 3.9 2.9

Latin America (0.2) - (2.7) 2.4Brazil (2.2) (1.5) (2.7) (3.0)Mexico - - (2.5) (2.5)

Emerging Asia 0.8 (1.4) (3.7) (2.6). . . .

Indonesia (1.3) (0.1) (2.4) (1.6)

CEEMA 0.6 - (5.4) (4.2)

Hungary (5.0) (3.3) (3.8) (3.5)Poland (2.0) (3.9) (5.0) (4.0)

uss a . . . .

Fiscal deficit in Indonesia is lower than other countries.

Fiscal rule stated on Law Number 17/2003 has fixed upper limit of deficit in

9Departemen Keuangan Republik IndonesiaSource: JPMorgan as of Juni 2009

the level of 3% of GDP. In consequence, additional debt to finance fiscaldeficit is also limited.



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Debt Financing Development, 1998-2010

[ Trillion IDR ]

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**

Government Securities (netto) 0.0 0.0 100.0 401.6 150.1 9.0 -1.9 -3.1 6.9 22.6 36.0 57.2 85.9 99.4 107.5

Issuance, Gross 100.0 401.6 150.1 9.0 2.0 11.3 32.3 47.0 61.0 100.0 126.2 144.7 178.0

Domestic - - 100.0 401.6 150.1 9.0 2.0 11.3 23.4 22.5 42.6 86.4 86.9 97.8 136.6

Foreign Currency - - 0.0 0.0 0.0 0.0 0.0 0.0 9.0 24.5 18.5 13.6 39.3 47.0 41.4

Bonds Redemption and Buyback 0.0 0.0 0.0 0.0 3.9 14.4 25.5 24.5 25.1 42.8 40.3 45.3 70.5

ore gn nanc ng ne o - . - . . . . . . . - . - . - . - . - . - . - .

Drawing, Gross 11.9 14.4 51.0 49.6 17.8 26.2 18.9 20.4 18.4 26.8 26.1 34.1 45.0 51.2 54.0

Program Loan - - 24.9 25.2 0.8 6.4 7.2 1.8 5.1 12.3 13.6 19.6 30.1 28.6 29.4

Project Loan 11.9 14.4 26.1 24.4 17.0 19.7 11.7 18.6 13.4 14.6 12.5 14.5 20.1 28.4 41.4

Aid channeling -5.2 -5.8 -16.8

Principal Repayment 16.3 18.7 30.0 20.2 7.6 15.9 12.3 19.8 46.5 37.1 52.7 57.9 63.4 68.0 54.1

Domestic Loan Drawing, Gross 1.0

Debt financing, Total -4.4 -4.3 121.0 431.0 160.3 19.2 4.7 -2.6 -21.2 12.3 9.4 33.3 67.5 82.7 107.3

Net additional foreign loan recorded as negative since 2004

Total debt financing was negative in 2003-2004 thanks to the proceeds



Notes:State Budget 2004-2008 PAN/LKPP - Audited*) State Budget (Realization) 2009 **) State Budget (Revision) 2010


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Realization of Government Securities Issuance2009 & 2010 (as of May, 14th 2010)

APBN APBN-P Realization

%

realization

to APBN

%

realization

to APBN-P

Redemption & Buy back 2 01 0 6 7,54 0,41 5,0 22 ,75 2 67,540,415,022,752 40,681,101,769,319 60.23% 60.23%

e ov . ecur es , , , , , , , , , , , , . .

Buyback 3,000,000,000,000 3,000,000,000,000 0.00% 0.00%

Issuance Need 2010 174,969,515,022,752 178,040,815,022,752 86,939,860,000,000 49.69% 48.83%

Government Debt Securities/GDS 71,120,000,000,000

omest c 52,570,000,000,000

- ON 34,125,000,000,000

- ZC -

- SPN 18,445,000,000,000- -

International GDS 18,550,000,000,000

Government Islamic Securities 15,819,860,000,000

SBSN Domestik 4,444,000,000,000

, , , ,

SDHI 3,342,000,000,000

SBSN Valas -


Notes 2010:

- Assumption for exchange rate on issuance plan 2010 refers to APBN IDR 9,200/USD

- Exchange rate of January 20, 2010 applies to the realization of International GDS IDR 9.275/USD


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Program Loans, 2009-2010

(millionUSD)

APBN RevisionNo Lender ProgramName

2010

, ,

1 JICA ClimateChangeProgramLoanIII 300 300

Total 300 300

2 ADB DevelopmentPolicySupportProgramVI 200 200Cunterc clical Su ort Facilit CSF 500

Total 200 700

3 WB SeventhDevelopmentPolicyLoan 600 600FourthInfrastructureDevelopmentPolicyLoan 200 200

LocalGovernment

DAK

Support

BOSKITARefinancing2 200 164

ClimateChangeProgramLoan 200

Total 1,000 1,164

4 France ClimateChangeProgramLoanII 200 200

o a

744 744

1 WB PNPMRefinancing 744 744

Sectoral


Total 744 744

Total2,444 3,108


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Foreign Loans Financing, 2000-2010

34.1

45.0

51.254.0

40

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**

17.8

.

18.9 20.4 18.4

. .

10.2 10.36.6

0.5 0.2

0

20

riliunRupiah

]

7.6

15.912.3

19.8

46.5

37.1

28.1

10.3

26.623.9

18.4 16.8

40

20[

52.757.9

63.468.0

54.1

80

60

ForeignLoanDrawing,bruto ForeignLoanPrincipalRepayment ForeignFinancing(netto)

r on

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**

Foreign Loan Drawing, bruto 17.82 26.15 18.89 20.36 18.43 26.84 26.11 34.07 45.01 51.24 53.98

Foreign Loan Principal Repayment (7.62) (15.88) (12.26) (19.81) (46.49) (37.11) (52.68) (57.92) (63.44) (68.03) (54.14)

Foreign Financing (netto) 10.20 10.27 6.63 0.55 (28.06) (10.27) (26.57) (23.85) (18.42) (16.79) (0.16)


Notes:*) State Budget (Realization) 2009**) State Budget (Revision) 2010


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Project & Program Loans Drawing, 2005-2010as of April 30th, 2010

[Trilion IDR]

2008

2010

2009

Realization as of Apr 30, 2010

INSTRUMENT 2006 2007

Nominal % to APBNto

APBN-P

1. Program Loan 13.53 19.90 30.28 28.57 24.44 29.42 5.47 22.4% 18.6%

-

on billion US$ 1.50 2.11 2.74 3.04 2.44 3.20 0.61

a. World Bank 5.50 5.66 12.91 14.65 17.44 17.56 - 0.0% 0.0%

b. A D B 5.51 8.47 9.17 5.06 2.00 6.44 4.59 229.6% 71.3%

c. Japan 0.90 3.77 4.87 6.07 3.00 2.76 0.88 29.5% 32.0%

d. France - - 2.20 2.79 2.00 1.84 - 0.0% 0.0%

e. IDB 1.83 1.79 - - - - - 0.0% 0.0%

. - - - - - - - . .

2. Project Loan 19.81 19.54 25.28 22.64 24.52 24.56 5.85 23.9% 23.8%

on billionr US$ 2.20 2.04 2.35 2.41 2.45 2.67 0.65


TOTAL 33.34 39.44 55.56 51.20 48.96 53.98 11.33 23.1% 21.0%

on billion US$ 3.70 4.14 5.09 5.45 4.90 5.87 1.26


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23/80

Project Loan Drawing, 2010as of April 30th

70%

80%

7,000

8,000

[ Billion IDR ]

63.8%

50%

60%

5,000

6,000

27.9% 28.2% 30%

40%

3,000

4,000

14.3%11.5%

18.3%13.4%

10.9% 10%

20%

1,000

2,000

0.0% 0.0% 0.0% 0.3% 0.0% 0%

BPK

KEM.

DAGRI

KEM.

HAN

KEM.

KEU

KEM.

TAN

KEM.

ESDM

KEM.

HUB

KEM.

DIKNAS

KEM.

KES

KEM.

AG

KEM.

HUT

KEM.

KP

KEM.

PU

KEM.

LH

KEM.

PP

KEM.

PAN

BPS

/BAPPENAS

BPN

.KOMINFO

POLRI

LKN

KEM.

PDT

BKKBN

LIPI

BAKORSPN

BKN

BPKP

KEM.

DAG

KPK

BAKORPB

KORSTANAL

17Kementerian Keuangan Republik Indonesia

PP

KE B

Budget Realization %(RHS)


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Debt Portfolio Outstanding, Debt

Maturit Profile Government SecuritiesDevelopment and Foreign Loans



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Government Debt Outstanding, 2000-2010

2001 2002 2003 2004 2005 2006 2007 2008 + 2009 ++ Apr'10 +++

a. Loan (on billion US$) 58.90 63.74 68.91 68.59 63.09 62.02 62.25 66.69 65.02 63.54Bilateral *) 35.16 40.37 46.19 46.48 42.16 41.07 41.03 44.28 41.27 38.76

Multilateral **) 20.68 20.61 19.98 19.48 18.78 18.84 19.05 20.34 21.53 21.64

*** . . . . . . . . . .

Suppliers ***) 0.48 0.39 0.37 0.29 0.17 0.11 0.08 0.09 0.07 0.06

Others ***) 0.17 0.17 0.17 0.17 0.17 - - - - -

b. Govt. Securities (on billionUS$) 63.52 73.30 76.64 71.29 70.51 82.34 85.26 82.78 104.20 112.67foreign currency denominated - - - 1.00 3.50 5.50 7.00 11.20 15.23 17.22

domestic currency denominated 63.52 73.30 76.64 70.29 67.01 76.84 78.26 71.58 88.97 95.45

Central Government Debt, Total

(on billion US$)122.42 137.04 145.55 139.88 133.60 144.36 147.51 149.47 169.22 176.21

Central Government Debt, Total 1,273.18 1,225.15 1,232.04 1,299.50 1,313.29 1,302.16 1,389.41 1,636.74 1,590.66 1,588.02(on billion IDR)

includes SBN domestic denominated

(on trilion IDR)660.65 655.31 648.75 653.03 658.67 693.12 737.13 783.86 836.31 860.22

Exchange rate (IDR/US$1) 10,400 8,940 8,465 9,290 9,830 9,020 9,419 10,950 9,400 9,012

GDP (on billion IDR) 1,646.32 1,821.83 2,013.68 2,295.83 2,774.28 3,339.48 3,949.32 4,954.03 5,613.44 6,253.79

Debt Ratio to GDP 77% 67% 61% 57% 47% 39% 35% 33% 28% 25%

Notes:+ preliminary figure++ very preliminary figure


+++ as of April 2010* Includes semi commercial

** Some figures are semi commercial

*** Includes commercialMinistry of Finance Republikc of Indonesia


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Trend of Government Debt Outstanding, 1998-2010

611 573

1,400

1,600

[ trillion IDR]

Government securities issuance more importantly indomestic market is aimed to refinance maturing debt,balance foreign loan and strengthen domestic financial

583 613 570 583637 620 559

586

800

1,000

1,200

502

652 661 655 649 662 693743 803

906 9791,015

453

200

400

600

-

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008+ 2009++ Apr'10+++Loan Government Securities

100

[ %]

ear + ++ pr +++

Loan 82% 47% 47% 48% 47% 47% 49% 47% 43% 42% 45% 38% 36%

Govt. Securities 18% 53% 53% 52% 53% 53% 51% 53% 57% 58% 55% 62% 64%

Central Govt. Debt, total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%


Catatan:

+ preliminary figure

++ very preliminary figure

+++ as ofApril 30th, 2010

In most of the cases, outstanding of foreign loanincreases when there is domestic exchange rate

depreciation Ministry of Finance Republikc of Indonesia


27/80

Debt Maturity Profile as of April 30, 2010

3

120

140

[Triliun Rupiah]

Govert. obligationissued for bankrecap (BI/SRBI-001)

44

43

4747

45 3331

80

100

54 62 5057 55 61

12

36

40 35

26

21

1613

11 4 1

140

60

24

38 39

1725 21 18 23 15 20 20 14

2029

9

8

54 4 2 1 1 1

-

20

2010

2011

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

-2055

20

40

Pinjaman Luar Negeri Surat Berharga Negara

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Loan 60% 45% 41% 49% 45% 48% 51% 47% 42% 37% 34% 61% 45% 44% 42%

Govt. Securities 40% 55% 59% 51% 55% 52% 49% 53% 58% 63% 66% 39% 55% 56% 58%


Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Loan 32% 79% 35% 25% 100% 18% 100% 100% 2% 100% 8% 100% 4% 2% 100% 100%

Govt. Securities 68% 21% 65% 75% 0% 82% 0% 0% 98% 0% 92% 0% 96% 98% 0% 0%


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29/80

Foreign Loans by Creditor Types, 1998-2010

on

Nmnl % Total

2008

Apr 30 - 2010

2002 2003 2004 2005 2006 2007 20092001NEGARA 1998 1999 2000

JAPAN 22.03 26.00 24.16 21.88 24.97 28.38 28.64 25.58 24.47 24.63 29.61 27.61 26.85 42.3%

ADB 6.13 7.21 7.67 8.04 8.65 8.77 9.04 9.16 9.41 10.18 10.87 10.89 11.14 17.5%

11.32 12.09 12.42 12.17 11.53 10.67 9.90 9.11 8.74 8.37 8.96 10.10 9.90 15.6%

Others*) 16.91 16.42 16.85 16.82 18.58 21.09 21.01 19.25 19.40 19.07 17.24 16.43 15.64 24.6%

TOTAL**) 56.39 61.73 61.10 58.90 63.74 68.91 68.59 63.09 62.02 62.25 66.69 65.02 63.54


otes:*) Including outstanding of other bilateral & multilateral donors**) Government securities excluded



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Foreign Loans by Creditor Types, 2000-2010

29% 29% 31% 31% 31% 31% 31% 26% 25%25%90%

100%

14% 14% 13% 13% 15% 15% 16%16% 17% 18%

60%70%

21% 18% 15% 14% 14% 14% 13%16% 16%

30%

40%

50%

37% 39% 41% 42% 40% 40% 40%45% 42% 42%

0

10%

20%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*)

Lain-Lain ADB World Bank Jepang


Notes:

*) as of April 30th, 2010

Multilateral donor (WB and ABD) and Japan has been acting

in providing soft loan with long maturity and low costMinistry of Finance Republikc of Indonesia


31/80

Foreign Loans by Sector, 2005-2010

[ Million USD ]

2005 2006 2007 2008 2009 2010

Farm, Agriculture, Forestry and Fisheries 1,846 1,755 1,641 1,615 1,784 1,753

Mining and Quarrying 424 623 662 804 776 764

Processing industry 2,593 2,387 2,415 2,659 2,291 2,160

Electricity, Gas and Water supply 7,232 6,607 6,157 6,838 5,473 5,256

ons ruc on , , , , , ,

Trade, Hotel and Restaurant 1,158 1,036 955 960 821 790

Transportation and Communication 3,477 3,144 2,897 2,723 2,368 2,271

Financial Leasin and Financial services 6 593 7 103 7 913 8 768 8 723 8 946

Services 13,274 13,509 13,730 15,252 15,463 15,203

Others sector 15,827 15,580 15,833 15,926 15,072 14,573

, , , , , ,

Source: External Debt Statistics of Indonesia, reprocessed


Notes:

as of April 30, 2010


32/80

Foreign Loans by Sector, 2005-2010 (chart)

14 000

15,000

16,000

[MillionUSD]

11,000

12,000

13,000

7,000

8,000

9,000

,

3,000

4,000

5,000

,

1,000

2,000

2005 2006 2007 2008 2009 2010

Farm,Agriculture,ForestryandFisheries MiningandQuarrying Processingindustry Electricity,GasandWatersupply

Construction Trade,HotelandRestaurant TransportationandCommunication Financial,LeasingandFinancialservices

Services Otherssector



33/80

Government Debt by Currency, 2001-2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010***

On Original Currencies

IDR*) 660.7 655.3 648.7 653.0 658.7 693.1 737.1 783.9 836.3 860.2

USD**) 28.0 27.9 24.4 24.2 26.4 27.5 28.4 32.8 37.1 39.3

JPY**) 2,751.2 2,855.5 3,242.8 3,137.4 3,184.4 3,066.0 2,941.9 2,820.5 2,713.8 2,682.0EUR**) 8.0 8.2 8.4 8.0 8.1 7.8 7.2 6.7 6.0 5.9

-------------------------- --------------------------

Ekuivalen on billion US$

IDR 63.5 73.3 76.6 70.3 67.0 76.8 78.3 71.6 89.0 95.5

USD 28.0 27.9 24.4 24.2 26.4 27.5 28.4 32.8 37.1 39.3

JPY 21.0 24.0 30.3 30.5 27.0 25.8 25.9 31.2 29.4 28.5

EUR 7.1 8.6 10.5 10.9 9.6 10.2 10.5 9.5 8.6 7.8

Others Currencies 2.7 3.2 3.7 3.9 3.5 4.0 4.4 4.4 5.2 5.2

. . . . . . . . . .

Exchange rate IDR/US$1 10,400.00 8,940.00 8,465.00 9,290.00 9,830.00 9,020.00 9,419.00 10,950.00 9,400.00 9,012.00

Exchange rate JPY/US$1 131.00 118.75 107.11 102.74 117.83 119.01 113.39 90.33 92.42 94.13

Exchan e rate EUR/US$1 1.12 0.95 0.79 0.73 0.84 0.76 0.68 0.71 0.70 0.76


Notes:

Nominal on billion*) Nominal IDR on Trilion Rupiah, **) Nominal on billion, ***) as of April 30th ,2010Ministry of Finance Republikc of Indonesia


34/80

Government Debt by Currency, 2000-2010

18% 17% 18% 17% 16%

6% 6% 6% 7% 8% 7% 7% 7% 6% 5% 4%90%

100%

21% 23% 20%17% 17% 20%

19% 19%22%

22% 22%

22%

60%

70%

40%

50%

53% 52% 53% 53% 50% 50% 53% 53% 48%53% 54%

10%

20%

30%

0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*)

Others EUR JPY USD IDR


Notes:*) as of April 30th, 2010

- , ,government debt between 2008 and 2009 albeit a slight decrease recordedin 2008 and 2009 in the dawning of global financial crisis that was also

marked with Rupiah depreciation Ministry of Finance Republikc of Indonesia


35/80

Foreign Loans Drawing by Financing Type, 2005-2010

60%

70%

80%

30

35

40

38.9

5

1

4

.28

64

.

56

30%

40%

50%

15

20

25

12.

21

13.

53

19.

90

30.

28

28.

57

29.

42

19.

8

19.

52

22.

24

0%

10%

20%

5

10

2005* 2006* 2007* 2008* 2009** 2010***

ProgramLoan ProjectLoan %ProgramLoan %ProjectLoan[Trillion IDR]

Loans Instruments 2005* % 2006* % 2007* % 2008* % 2009** % 2010*** %

Program Loan 12.21 24% 13.53 41% 19.90 50% 30.28 55% 28.57 56% 29.42 55%

Project Loan 38.95 76% 19.81 59% 19.54 50% 25.28 45% 22.64 44% 24.56 45%

TOTAL 51.16 33.34 39.44 55.56 51.20 53.98


Notes:*) Realization figures**) Ceiling figure in 2009

***) APBN-P 2010 figuresMinistry of Finance Republikc of Indonesia


36/80

Chapter 4e anagemen s er ormance e er ormance

Measurement and Comparison, Loan Disbursement,

-



37/80

Debt to GDP Ratio, 2000-2010

85%89%

100%

120%

6,000

7,000[ % ]

58%

77%

67%

61% 57%

47%60%

80%

3,000

4,000

,

35% 33%28%

25%

20%

40%

1,000

2,000

0%0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*Apr'10**

Debt Outstanding GDP Debt ratio to GDP (RHS)

[ Trillion IDR ]

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* A r'10**

Notes:*

Additional debt has helped to spur more growth in the economy. As

453 438 583 613 570 583 637 620 559 586 730 611 573100 502 652 661 655 649 662 693 743 803 906 979 1,015

553 940 1,234 1,273 1,225 1,232 1,300 1,313 1,302 1,389 1,637 1,591 1,588

LoanGovt. Secutities

Total

29Departemen Keuangan Republik IndonesiaDepartemen Keuangan Republik IndonesiaDepartemen Keuangan Republik IndonesiaSource: MoF and BPS

**) very preliminary as of April 30th, 2010a result, debt-to-GDP ratio has significantly decreases from 57% at

the end of 2007 to around 32% in 2009. The ratio in 2009 is far

better than in the pre-crisis period of the late 1990s. Ministry of Finance Republikc of Indonesia


38/80

Debt to GDP Ratio Countries Comparison, 1998-2007

Indonesia is one of the top performers in the non investment grade peer group (Argentina,the Philippines and Turkey) and this still holds even if one compares it with advancedcountries such as US, UK, Japan and Italy.

180

140

100

20

60

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Argentina Jepang Indonesia Filipina Turki Italia Inggris Amerika Serikat

30Departemen Keuangan Republik IndonesiaSource: Economist Int ell igence Unit



39/80

Debt to GDP Ratio in Various Countries, 2008-2014

2008f 2009f 2010f 2014f

Brazil 65.4 64.7 62.9 54.1

. . . .

India 80.6 82.7 82.9 71.6Japan 202.5 217 225.1 222.3

United Kingdom 50.4 61 68.7 76.2

United States 68.7 81.2 90.2 99.5

G - 20 65.5 72.5 76.7 76.8

Advanced G - 20 Countries 83.2 93.2 99.8 103.5

Emerging Market G - 20 Countries 35.7 37.6 37.8 32

ource : nternat ona onetary un , e tate o u c nances; ut oo an e um- erm o c es ter t e

Crisis

Indonesia is in the list of the Emerging Market G-20 countries


Taking a look at the additional debt in developed economies, theyaccumulate more debt than their developing counterpart


Maturity Profile of Tradable Government Securities


40/80

Maturity Profile of Tradable Government Securities,in the end of 2001 and April 30th, 2010

[Trilion IDR]

nce , e o as con uc e repro ng s ra egy o mprove governmen esecuritiess maturity profile, hence reducing refinancing risk

70

75

as of April 30, 2010 End of Year

50

55

60

65

35

40

45

20

25

30

-

5

10


Notes:

Government Securities/SBN consist of Government Debt Securities/SUN (2001 & 2009), and Government Islamic Securities/Sukuk (2009)Ministry of Finance Republikc of Indonesia

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2035 2037 2038

D bt S it hi d B b k


41/80

Debt Switching and Buyback

Debt switching: strategy to reduce refinancing risk

YearAuction

Frequency

Series

to be Switched

Tenor of Series

to be Switched

Offered

Tenor

Volume of Bid

Received

(billion IDR)

Volume of Bid

Accepted

(billion IDR)

2005 1 x 9 series < 1 year to 4 years 15 years 7,721 5,673

2006 12 x 7 to 21 series < 1 year to 5 years 5 to 19 years 54,177 31,179




as of May 14th, 2010 1 x 19 series < 1 year to 3 years 20 years 3,273 2,296

Total 112,005 62,439

Buyback: strategy to stabilize market and to reduce debt outstanding

YearAuction

Frequency

Series

to be Buy Back

Tenor of Series

to be Buy Back

Volume of Buy

Back

Accepted

(billion IDR)

2003 2 x 4 to 7 series 1 year to 3 years 8,127

x ser es years o years ,

2005 4 x 2 to 8 series < 1 year to 4 years 5,158




,

as of May 14th, 2010 - - - - - -

Total 28,999

D bt S t R d D bt


42/80

Debt Swap to Reduce Debt

Debt swap agreement with several donors has successfully reduced debt outstanding

Title1 2 3 4 5 6

Country Debt SwapProject Cancelation

Amount Commitment Realization

Debt Swap I Learning Resources Centres EUR 12.8 EUR 25.6 EUR 25.6

Debt Swap II Junior Education in Eastern Region of Indonesia EUR 11.5 EUR 23.0 EUR 0.0

Debt Swap IIIa Financial Assistance for Environmental EUR 6.3 EUR 12.5 EUR 3.2

Germany

nves emen s o cro an ma n erpr ses

Debt Swap IIIb Strengthening the Development of National

Parks in Fragile Ecosystem

EUR 6.3 EUR 12.5 EUR 0.0

Earthquake Area in Yogyakarta and Central Java

. . .

Debt Swap V Debt2Health EUR 25.0 EUR 50.0 EUR 10.0

. . .

USD 24.2 USD 24.2 USD 16.6

USA Debt Development Swap Tropical Forest Conservation Act/TFCA USD 20.0 USD 22.0 USD 2.1


EUR 149.3 EUR 42.7

USD 46.2 USD 18.7TOTAL

R t t i 2003


43/80

Restructuring 2003

Agreement between the Government and Bank Indonesia on August 1,2003 on the settlement of liquidity support to banking industry (BLBI)and financial relationshi between the Government and Bank Indonesia

Agreed BLBI amounting Rp 144.536.094.294.530 SU-001 Rp 80.000.000.000.000

SU-003 Rp 64.536.094.294.530

Both series reissued with new single series SRBI-01/MK/2003 Rp144.536.094.294.530 starting 1st August 2003.

Repayment arranged under burden sharing scheme: In the case where BIs monetary liabilities are greater than 10%, the

Government will use its surplus accrued to repay remaining principal ofSRBI-01

,

monetary liabilities filled up to that 3% figure. Interest Rate of SRBI-01/MK/2003: 0,1% per annual (fixed, semi

annual)

Departemen Keuangan Republik Indonesia 35Ministry of Finance Republikc of Indonesia

R t t i 2006


44/80

Restructuring 2006

SU-002/MK/1998: Date of issuance: October 23, 1998;

Pre-restructuring SU-002/MK/1998:

Nominal: Rp20.000.000.000.000,-

Post-restructuring

. . . . ,-

Principal is indexed to inflation, on a yearlybasis.

After indexation, of 3% interest payment asmade on semi-annual basis calculated fromprincipal.

1% interest will be repaid in semi-annual

basis.

Principal was amortized semi-annually,starting from 1st April 2025 (no indexation to

inflation a lies . Principal amortization is in semi-annual basis

starting from 1st October 2003 to 1 April 2018.

SU-004/MK/1999: Date of issuance : Ma 28, 1999;

SU-004/MK/1999:

Nominal: Rp53.779.500.000.000,-

3% interest will be re aid in semi-annual Nominal: Rp53.779.500.000.000,-

Principal is indexed to inflation, on a yearlybasis.

After indexation, of 3% interest payment asmade on semi-annual basis calculated from

basis.

Principal was amortized semi-annually,

starting from 1st December 2025 (no

indexation to inflation applied).

.

Principal amortization is in semi-annual basisstarting from 1st June 2003 to 1st December2018.

-

SU-007/MK/2007 Nominal: 54.862.150.308.421

Non tradable, 0.1% interest per annum


SU-004 IDR54.862.150.308.421: Interest arrear: Rp16.929.470.080.766

Indexed to inflation: Rp37.932.680.227.655 36

Principal was installed exponentially by a cash

or tradable SUN until 2025.


Restructuring 2008: Restructuring for Interest Rate


45/80

g gof SU-002 & SU-004

Based on Its report on Central Govt Expenditure dated October 16-28, 2008,Working Committee agreed among others that SU-002 and SU-004 will berestructured in 2009 with interest rate applied was 0.1% or with benchmarkand terms condition of SRBI-01.

Ministry of Finance and BI agreed that interest rate of both SU-002 and SU-004will be reduced to 0.1% from 1% and 3% respectively, starting on 1st January

.

SU and SRBI Positionas of April 30th, 2010

Seri Terbit Jatuh Tempo Nominal

SU-002/MK/1998 23-Oct-98 2010 - 2025 19.717.357.592.610,00

SU-004/MK/1999 28-May-99 2010 - 2025 53.779.500.000.000,00

SRBI-01/MK/2003 07-Aug-03 01-Aug-33 126.697.947.827.429,00

SU-007/MK/2007 01-Jan-06 2007 - 2025 50.714.996.142.486,00

Departemen Keuangan Republik Indonesia 37

Amortization of SU-007 was conducted since 2007

Amortization of SU-002 and SU-004 will be conducted in 2010 Ministry of Finance Republikc of Indonesia

250.909.801.562.525,00TOTAL

Foreign Loans Disbursement Performance,


46/80

1997 April 30th, 2010

Undisbursed loans has lessened showing efficiency improvement of the use of the proceeds of foreignloan

Disbursement performance increases as project readiness criteria has been set up and correctly applied.In addition, project monitoring and evaluation has been installed in foreign loan management

200

250

[MiliarUSD]

50

100

150

0

Net

Commitment Disbursement Undisbursed [BillionUSD]

Tahun 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

NetCommitment 171.8 178.4 166.4 157.3 166.2 178.4 172.2 164.5 170.7 181.7 201.1 205.5 202.5


Disbursement 112.3 125.3 124.5 123.6 137.7 153.5 161.6 154.6 161.4 172.1 189.6 194.7 191.6

Undisbursed 59.5 53.1 42.0 33.7 28.5 24.8 10.6 9.9 9.3 9.7 11.6 10.8 10.9

External Debt Service: Countries Comparison in 2008


47/80

pand 2003-2008

Indonesia has shown a moderate level of external debt service to exportratio and was on the third rank in reducing the ratio (in 2003-2008) whileBrazil and Colombia were on the first and second.

Malaysia

xterna e t erv ce, 2008

(In percent of exports)

Brazil

x erna e erv ce, c anges -

(in percent of exports)

Thailand

South Africa

Poland

Colombia

Indonesia

Thailand

Chile

Indonesia

India

e

Turkey

Poland

Philippines

Colombia

Brazil

a ays a

South Africa

Philippines

39

0 5 10 15 20 25 30

ur ey

-50 -40 -30 -20 -10 0 10

n a


Debt Service to International Reserve Ratio 1999 2010


48/80

Debt Service to International Reserve Ratio, 1999-2010

21.6% 21.7%20.6%

20

25%

15.2%

13.8% 13.4%

18.1% 18.0%16.8%

17.9%

14.1%15%

11.5%

10%

5%

0%1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009** 2010***


Since 2004, debt service to international reserve ratio hasbeen continuing to decrease. This concern with liquidity

improvement and ability to endure (external) shock

Notes:

* Preliminary** Very preliminary


Debt-to-GDP Ratio: Countries Comparison


49/80

in 2008 and 2003-2008

Again, Indonesia is one of the top performers in reducing the level of debtto GDP ratio both in the group developing and developed economies

Turki Turki

u c e ,(in percent of GDP)

u c e , c an es -(in percent of GDP)

Jepang

Kolombia

Malaysia

Polandia

Jepang

Kolombia

Malaysia

Polandia

Chile

Filipina

India

Indonesia

Inggr s

Filipina

India

Indonesia

Inggris

Afrika Selatan

Amerika Serikat

Australia

Brasil

Afrika Selatan

Amerika Serikat

AustraliaBrasil


0 100 20030 10 10 30 50

External Debt to GDP Ratio in 2008 and 2003-2008


50/80

External Debt to GDP Ratio in 2008 and 2003 2008

A moderate and manageable level of external debt to GDP ratio is also anothersignificant achievement resulted from an effective debt management andpolicy

Brazil

External Debt, 2008

(In percent of GDP)

Philippines

External Debt, changes 2003-08

(In percent of GDP)

India

Colombia

Thailand

Indonesia

Brazil

Colombia

aaysa

South Africa

Indonesia

aaysa

Chile

Thailand

Turkey

Chile

Poland

India

Poland

South Africa

42

10 20 30 40 50 60 -50 -40 -30 -20 -10 0 10


Debt per Capita in Various Countries, 2001-2007


51/80

Debt per Capita in Various Countries, 2001 2007

Debt per capita in China and India is certainly much lower than Indonesia due to theirdemographic factor

Brazil, a rating-investment-grade country, shows a higher debt per capita than Indonesiawhich is in fact a non-investment- rade countr

40,000

45,000

50,000

4,000

4,500

5,000

30,000

35,000

3,000

3,500

15,000

20,000

,

1,500

2,000

,

-

5,000

10,000

-

500

1,000

43Departemen Keuangan Republik IndonesiaSource: Economist Int ell igence Unit


Brazil Indonesia Filipina Turki Cina India Italia [RHS]

Debt per capita: Countries Comparisoni 2008 d 2003 2008


52/80

in 2008 and 2003-2008

Indonesian debt per capita is among the lowest and it is considered tofluctuate insignificantly

Public Debt er Ca ita Chan es 2003-2010

Thailand

TurkiThailand

Turki

(in US$)

(in US$)

England

Kolombia

Malaysia

Po an a

EnglandKolombiaMalaysia

o an a

Brasil

Chile

FilipinaIndia

BrasilChile

FilipinaIndia

South AfricaUSA

Australia

South AfricaUSA

Australia


Debt to Revenue Ratio: Countries Comparisoni 2008 d 2003 2008


53/80

in 2008 and 2003-2008

Debt to revenue ratio in Indonesia has been stabilized to amoderate level and recorded the fastest decrease

ChileAustralia

u c e t, 2008

(In percent of revenues)

IndonesiaPhilippine

u c e , c anges -


South AfricaColombia

Poland

UK

TurkeyIndia

Colombia

Southa anBrazil

IndonesiaMalaysia

BrazilThailandMalaysiaAustralia

USPhilippinesIndia

Japan

PolandUSUK

Japan

45

10 110 210 310 410 510 610 -190 -140 -90 -40 10 60


Interest Payment to GDP Ratio in Various Countries,1998 2007


54/80

1998-2007

Interest payment to GDP ratio of Indonesia is better than countries like Turkey and ThePhilippines and rating-investment-grade countries such as Brazil and Italy.

18

14

16

10

12

4

6

8

0

2

46Departemen Keuangan Republik IndonesiaSumber: Economist Int ell igence Unit

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Japan Indonesia Philippines Turkey Italy United Kingdom United States



55/80

Chapter 5Costs of Borrowing Cost of Fund, Yield Curve,


Interest To Revenue and Expense Ratio, 2000-2009


56/80

p ,

%29.0

%

29.4

%

.5%

27.2

%25%

30%

Cost of fund is continuing to be

24.

19.2%

.5%

22.6

2

17.4

%

%

15%

20% more e c en

15

13.2

%

12.4

%

11.3

%

9.0

%10.8

%

10.6

%14.

12.8

%

11.9

%

10.5

%

9.0

%9.8

%

9.4

%

5%

10%

0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**

as a share of revenue as a share of expense

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010**Revenue 205,335 300,600 298,527 340,928 403,105 493,919 636,153 706,108 981,609 868,946 992,399

Expense 221,467 341,563 322,180 376,505 427,177 509,633 667,129 757,650 985,731 956,379 1,126,147

Debt Service Payment 50,068 87,142 87,667 65,351 62,486 65,200 79,083 79,806 88,430 93,802 105,650


Notes:

Realization figures 2000-2008 based on APBN 2000-2008 PAN/LKPP-Audited

* realization figures based on APBN (realization) 2009

** projection figures based on APBN (revision) 2010 Ministry of Finance Republikc of Indonesia

Interest to Total Debt 2000-2010


57/80

16%

18%

1,600

1,800

[ TrillionIDR

] [ Procentage

]

10%

12%

14%

1,000

1,200

1,400

4.06%

6.84% 7.16%

5.30%4.81% 4.96%

6.07% 5.74% 5.40%5.90%

6.65%

6%

8%

600

800

0%

2%

200

TotalDebt Interest

Debt

Payment Rasio

(RHS)

[Trillion IDR]

2000 2001 2001 2003 2004 2005 2006 2007 2008 2009 Apr 2010

48Kementerian Keuangan Republik Indonesia

Total Debt 1,234.28 1,273.18 1,225.15 1,232.04 1,299.50 1,313.29 1,302.16 1,389.41 1,636.74 1,590.66 1,588.02

Interest Debt Payment 50.07 87.14 87.67 65.35 62.49 65.20 79.08 79.81 88.34 93.80 105.65

Interest Payment To Revenue Ratio In Selected Countries,In 2008 and 2003-2008


58/80

In 2008 and 2003 2008

Public Debt Interest Pa ment, 2008 Public Debt Interest Pa ment, chan es 2003-08

Interest payment to revenue ratio of Indonesia is on moderate level while Turkey and thePhilippines have in a significant way brought down the ratio even further

ChileAustralia


Turkey

Philippines


Japan

Malaysia

UK

o an Indonesia

India

Brazil

South Africa

Colombia

US

Indonesia

e

Malaysia

Colombia

Poland

Turkey

IndiaPhilippines

AustraliaUS

UK

49

0 10 20 30 -35 -25 -15 -5 5

Source: IMFDepartemen Keuangan Republik IndonesiaMinistry of Finance Republikc of Indonesia

Interest Payment Realization 2002-2010


59/80

70%

80%

90%

100%

71% 71% 69% 68% 68%

40%

50%

60%

29% 29%37% 35% 31% 32% 32% 32% 32%

0%

10%

20%

2002 2003 2004 2005 2006 2007 2008 2009 2010*InterestPaymentofDomesticLoan InterestPaymentofExternalLoan

[trilionIDR]

*

Nml % Nml % Nml % Nml % Nml % Nml % Nml % Nml % Nml %

87.70 100.00 65.40 100.00 62.40 100.00 65.20 100.00 79.10 100.00 79.80 100.00 88.60 100.00 101.60 100.00 105.65 100.00

a. InterestPaymentof

DomesticLoan

62.30 71.04 46.40 70.95 39.60 63.46 42.60 65.34 54.90 69.41 54.10 67.79 59.90 67.61 69.30 68.21 71.9 68.01

b. InterestPaymentof 25.40 28.96 19.00 29.05 22.80 36.54 22.60 34.66 24.20 30.59 25.70 32.21 28.70 32.39 32.30 31.79 33.8 31.99

LoanInterest

Payment


x erna oan

Notes: figures based on APBN (revision) 2010

Program Loans: Cost Structure


60/80

Tenor Interest Fee*

Asian Development Bank

+

Creditor/ ProgramTrem & Condition

2. Capital Market Development Cluster 15.0 LIBOR + 0.2% 0.15%

World Bank

1. Develo ment Polic Loan 6 24.5 LIBOR + 0.05% 0.25%

2. Biaya Operasional Sekolah (BOSKITA) 25.0 LIBOR + 0.05% 0.25%

3. Infrastructure Development Policy Loan 3 24.5 LIBOR + 0.05% 0.25%

Japan (JBIC/JICA)1. Climate Change Program 15.0 0.15% -

2. Economic Stimulus and Budget Support Loan 15.0 JPY LIBOR -

3. Infrastructure Reform Sector Development 15.0 0.70% -

4. Development Program Loan 5 15.0 0.70% -

Notes:

France1. Climate Change Program 15.0 EURIBOR - 0.3% -


* ADB loans normally impose commitment fee while World Bank requires so called front-end fee** Loan proceeds not to directly finance the climate change project


Yield Curve of Domestic Government Securities


61/80

13.00

11.00

9.00 Tenor 14-May-10 Dec '09 Mar '09

1Y 6.47 6.14 9.47

7.00

. . .

3Y 7.38 7.89 10.94

4Y 7.91 8.44 11.31

5Y 8.40 8.80 11.69

6Y 8.50 9.06 11.92

7Y 8.57 9.24 12.10

10Y 8.74 10.04 12.69

5.00

1Y 2Y 3Y 4Y 5Y 6Y 7Y 10Y 15Y 20Y 30Y

' '

15Y 9.47 10.64 12.70

20Y 9.98 10.72 12.96

30Y 10.26 10.97 12.95

- ay- ec ay


Declining cost of fund of Domestic Government Securities reflects increasing marketconfidence as a response of prudent fiscal policy and debt management

Yield Curve of Indonesian Global Bond


62/80

[Procentage]

9.16

9.479.36

9.00

8.79

.

6.84

6.56

4.48

4.84

5.15

5.31 5.35

4.79

5.01

5.34 5.35

.

31 Dec08 31Dec09 14May10

4Y 3.85

5Y 8.79 4.14 4.27

6Y 9.11 4.48 4.57

7Y 9.16 4.84 4.79

4.14

3.85

4.27

4.57 31Dec08

31Dec09

14May10

8Y 5.15 5.01

9Y 9.47 5.31 5.34

10Y 5.35 5.35

15Y

20Y

30Y 9.36 6.84 6.56


.

1 2 3 4 5 6 7 8 9 10 15 20 30


63/80

Chapter 6Performance of Secondary Market for Govt.

Securities Trading Volume, Govt. Securities

wners p ruc ure


Average Daily Trading of Domestic Govt. Securities,as of May 14, 2010


64/80

400

450

8.0

9.0

[ Frequency][ Trillion IDR ]

Until 2007, the increasing trend of

average daily trading showed a

better market li uidit . Global

300

350

6.0

7.0

financial crisis in 2008 has

significantly reduced tradingactivities. However, the average

200

250

4.0

5.0

vo ume rema ns er an

2005s figure when the crisis hit.

100

150

2.0

3.0

0

50

0.0

1.0

A M J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM J J A S O N D J F M AM

2004 2005 2006 2007 2008 2009 2010

Volume Average Daily Volume per Year Frequency - RHS


Government Securities Ownership - Bank and Non Bank,as of May 14, 2010


65/80

y ,

30.00%

600

700

[Trillion IDR]

The more diversified investor is demonstrated by the

shrinkage of bank ownership and the augmentation of non-

bank, foreign and retail investor

20.00%

25.00%

500

Increasing offshore ownership is a sign of better market

confidence

15.00%

300

400

10.00%

200

-

.

0

100

'04

'04

'04

'04

'05

'05

'05

'05

'05

'05

'06

'06

'06

'06

'06

'06

'07

'07

'07

'07

'07

'07

'08

'08

'08

'08

'08

'08

'09

'09

'09

'09

'09

'09

'10

'10

-10

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

14-May

NON-BANK BANK % Foreign to Total - RHS


Catatan:Non-Bank including Government institution



66/80

Domestic Government Securities Ownership (%)


67/80

Dec'04 Dec'05 Dec'06 Dec '07 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Jan'10 Feb'10 Mar'10 Apr'10 14-May-10

BANK 72.02% 72.44% 64.27% 56.23% 49.22% 51.06% 48.96% 46.14% 43.72% 42.62% 41.56% 40.08% 39.13% 39.22%

State-owned Bank Re 39.78% 38.64% 36.48% 32.38% 27.53% 28.19% 26.31% 25.08% 24.79% 24.13% 23.96% 23.78% 23.87%

Private Bank Recap 23.83% 21.35% 19.29% 15.20% 11.73% 12.16% 11.74% 11.00% 10.31 10.01 9.82 9.16% 9.13%

Non-recap Bank 8.12% 11.45% 7.83% 7.40% 8.59% 9.03% 9.50% 8.79% 7.29% 7.38% 6.71% 6.20% 5.33%

BPD recap 0.30% 0.99% 0.66% 1.25% 1.24% 1.55% 1.27% 1.13% 1.03% 0.79% 0.74% 0.61% 0.42%Shariate Bank 0.13% 0.14% 0.14% 0.14% 0.30% 0.31% 0.33% 0.34% 0.38% 0.40%

Bank Indonesia - 2.63% 1.80% 3.11% 4.38% 3.90% 4.82% 4.12% 3.87% 3.74% 3.14% 3.15% 2.38% 2.81%

Bank Indonesia - 2.63% 1.80% 3.11% 4.38% 3.90% 4.82% 4.12% 3.87% 3.74% 3.14% 3.15% 2.38% 2.81%

- -

NON-BANK 27.98% 24.93% 33.93% 40.66% 46.40% 45.04% 46.22% 49.74% 52.41% 53.63% 55.30% 56.77% 58.50% 57.97%

u ua un . . . . . . . . . . . . . .

Insurance 6.78% 8.08% 8.37% 9.10% 10.62% 11.02% 11.11% 12.01% 12.48% 12.82% 12.98% 13.16% 12.48% 12.49%

Foreign 2.69% 7.78% 13.12% 16.36% 16.66% 14.60% 15.68% 16.43% 18.56% 19.49% 20.21% 22.33% 24.55% 23.96%

Pension fund 4.11% 5.51% 5.51% 5.34% 6.27% 6.31% 6.18% 6.49% 6.45% 6.37% 6.37% 6.28% 6.16% 6.17%

0.11% 0.12% 0.24% 0.06% 0.10% 0.10% 0.11% 0.13% 0.08 0.09 0.06 0.07% 0.04% 0.04%

Others 0.77% 1.17% 1.58% 4.29% 6.44% 6.57% 6.66% 7.43% 7.07% 6.90% 7.76% 7.48% 7.52% 7.55%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Total [trilion IDR] 399.30 399.84 418.75 477.75 525.69 546.66 555.91 567.37 581.75 590.15 597.82 593.16 603.28 606.83


1. Include SBSN ownership.

2. Foreign Holders include banks, financial institutions, etc.

3. Others include individuals, corporates, foundations, etc.

*) Include SUN repo transaction to BI, since February 8, 2008.

Offshores Ownership of Domestic Government Securities,Classified by Tenor


68/80

120,000

140,000

[Billion IDR]

Most of foreign investors hold long-term (more than 5 years)government debt securities representing 71,94% of the totaloffshore holders as of January 21, 2009. It represents marketconfidence toward Indonesian long-term economy outlook.

100,000

60,000

80,000

75,89%74,25%

20,000

40,000

15,61%16,35%

Dec-08 Mar-09 Jun-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 14-May-10

Total 87,606 79,834 87,153 93,225 101,415 104,473 107,998 115,018 120,810 132,459 148,130 145,389

>5 61,055 55,326 62,930 69,456 71,898 74,241 76,702 82,922 87,632 98,355 112,120 110,921

0

8,51%9,39%

2-5 20,374 18,012 18,999 17,050 20,313 21,008 21,361 20,792 21,847 21,660 22,991 22,062

0-2 6,178 6,496 5,223 6,719 9,204 9,224 9,935 11,304 11,331 12,444 13,019 12,406

58Ministry of Finance Republikc of Indonesia

Spread over UST-5 Years


69/80

800TURK15 INDO15

COLM15

DATE TURK-15 INDO-15 US-5Y COLM-15

30Jun09 6.27 6.90 2.88 2.93

31Dec09 4.59 4.43 2.78 2.17

29Jan10 4.56 4.54 2.39 2.13

600 26Feb10 4.64 4.11 2.33 1.9531Mar10 4.36 4.18 2.53 1.81

15Apr10 4.29 4.07 2.54 1.73

16Apr

10 4.28 4.05 2.46 1.72

19Apr10 4.31 4.08 2.51 1.79

20A r10 4.31 4.08 2.54 1.79

400 21Apr10 4.33 4.02 2.48 1.7822Apr10 4.37 4.02 2.53 1.84

200

0


200

21Apr09 21Jun09 21Aug09 21Oct09 21Dec09 21Feb10 21Apr10



70/80

300

200

150

100

NAME PHIL-20 US-10Y COLM-20 INDO-20 TURK-20

30Jun09 3.83 6.94 6.94

31Dec09 5.48 3.85 5.82 5.77

29Jan10 5.69 3.60 6.01 5.69 5.84

50

PHIL20 COLM20

26Feb10 5.56 3.60 5.76 5.39 5.86

31Mar10 5.45 3.80 5.54 5.35 5.66

15Apr

10 5.20 3.79 5.41 5.18 5.59

16Apr10 5.20 3.72 5.49 5.18 5.60

19Apr10 5.25 3.75 5.53 5.22 5.63

20Apr10 5.20 3.75 5.53 5.22 5.63


0

16Nov09 6Dec09 26Dec09 15Jan10 4Feb10 24Feb10 16Mar10 5Apr10

INDO20GMTN TURK20 21Apr10 5.19 3.69 5.52 5.21 5.6722Apr10 5.21 3.73 5.55 5.24 5.71



71/80

600NAME COLM-37 INDO-38 US-FEB 38 TURK-38 TURK-40

30Jun09 7.19 8.34 4.33 7.55

31Dec09 6.62 6.83 4.62 6.75

400

an . . . . .

26Feb10 6.65 6.80 4.53 6.91 6.91

31Mar10 6.42 6.46 4.69 6.83 6.84

15Apr

10 6.36 6.37 4.69 6.72 6.76

16Apr10 6.37 6.36 4.65 6.72 6.76

19Apr10 6.41 6.39 4.67 6.74 6.80

300

20Apr10 6.43 6.38 4.65 6.74 6.79

21Apr10 6.39 6.36 4.59 6.76 6.81

22Apr10 6.40 6.35 4.61 6.83 6.89

200

100

COLM37 INDO38


0

22Apr09 22Jun09 22Aug09 22Oct09 22Dec09 22Feb10 22Apr10


72/80

Chapter 7

Opinion, HIPICs and Conclusion


Indonesian Credit Rating


73/80

Rating Improvement Determinants

The Indonesian economy resilience in the face of global crisis in 2007-2008

Prudential government debt management:

Decrease of debt to GDP ratio

Timeliness of debt obligations payment

Increasing investors / lenders confidence

, , Improvement rating one notch down the potential performance yield of

new foreign currency of government securities approximately 75-115bps

Credit risk measurement of a country by OECD member countries

Range 0-7 (high risk)


Decrease 1 level CRC potentially reduce the cost of foreign loans,

especially new export credit facility of about 130-150bps

Indonesian Credit Rating Development (1)


74/80

Indonesian Rating Profile 1999 - 2010

Rating

S&P Fitch Moody's CRC

1999 CCC+ B- B3 6

B- B- B3 6

a un

S&P: 2 notch goes toinvestment rade

2001 CCC B- B3 6

2002 CCC+ B B3 6

Fitch: 1 notch goes toinvestment grade

2004 B+ B+ B2 6

2005 B+ BB- B2 5

-

oo y s: no c goes oinvestment grade

2007 BB- BB- B1 5

2008 BB- BB Ba3 5


-

2010 BB BB+ Ba2 4

Indonesian Credit Rating Development (2)


75/80

13

14

13

14BBB+ Baa1Inves

gr

Reka italisasiKrisis Reprofiling VR & HB, Lelang penerbitan SUN

Lelang penerbitan SUNsecara re uler ro ram

tment

ade

Selective default was experienced by the economy in 2001 and 2003Rating has significantly upgraded after 2004

10

11

12

10

11

12

BB+

BB

BBB-

Ba2

Baa3

Ba1

tment

de

Perbankan

e onom1998

Asset-Bond Swap, &penerbitan SUN

jk panjang

secara reguler,

program Buyback

secara reguler,program Buyback, &

Debt Swtiching

Buyback, DebtSwtiching, &

diversivikasi instrumenInveg

6

7

8

9

6

7

8

9

B

BB-

B-

B+

B3

B1

B2

Ba3

entgrade

NonInvest

3

4

5

3

4

5

CCC-

CCC+

CCC Caa2

Caa3

Caa1

Moodyss upgraded to Ba2on September 16,2009

S&Ps upgraded to BBon March 12, 2010

NonInvest

S&P sempatmenurunkan

rating ke SelectiveDefault namun

entgrade

-

1

2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

-

1

2

1998 1999 2000 2004 2005 2006

SD/DDD

R/C

CC a

C

1997 2001 2002 2003 2007 2008 2009 2010

c s upgra e oon January 25, 2010

direvisi kembali 2

hari kemudian

Kementerian Keuangan Republik Indonesia 64Kementerian Keuangan Republik Indonesia

S&P's Fitch's Moody's (RHS)

Indonesian Sovereign Rating Performance Upgrading


76/80

Moodys on 16 Sept. 2009 upgraded credit rating of Indonesia from Ba3 to Ba2with highlights as the following: The upgade was prompted by the Indonesian economys relatively strong resilience

-

The upgrade was also prompted by an improving credit profile derived from

Indonesias ongoing policy prudence, structural reforms, and appropriate debtmanagement

n anuary , c s upgra e cre ra ng o n ones a rom o +with stable outlook and the highlights as the following:

The rating action reflects Indonesia's relative resilience to the severe global financialstress test of 2008 - 2009 which has been underpinned by continued improvements inthe country's public finances, a fundamental sovereign rating strength, and a materialeasing of external financing constraint.

On 24 March 2010, S&P upgraded credit rating of Indonesia from BB- to BB withhighlights as the following: The Ratings on Indonesia are supported by improving public debt ratios and

accumulation of foreign reserves, which eases potential external liquidity concerns Favorable initial conditions based on years of fiscal consolidation, conservative

budgeting and banking sector reforms combined with its less susceptible economic


structure and mostly appropriate policy response to shocks, enable Indonesia tonavigate the crisis without detriment to its fiscal and external credit metrics


Supreme Audit Agency Opinion on Governments FinancialReport 2008


77/80

Indonesian Su reme Audit A enc BPK o ines un ualified(Wajar Tanpa Pengecualian/WTP) to the Financial Report of

all accounts related to debt management and administration-

Principal payment of foreign debt account (BA-096)

Principal payment of government securities account (BA-097)

Debt managements accountability continues to improve Internal control system


GDP per capita of HIPICs and Debt-Relief Countries

(USD)


78/80

Ghana 247 258 292 353 402 476 553 650

Countries 2000 2001 2002 2003 2004 2005 2006 2007

Year(USD)

Benin 312 318 364 447 492 505 528 601

Mali 242 255 315 399 433 457 490 556

Burkina Faso 220 229 260 326 378 390 402 458

Gambia, The 304 292 250 241 255 285 307 377

Madagascar 240 272 256 310 241 270 287 372

Mozambique 234 218 220 238 284 320 326 363

Rwanda 212 196 187 199 218 258 303 341

Niger 162 169 182 213 226 251 262 294

Sierra Leone 140 171 190 192 199 217 247 286

Ethiopia 124 121 112 120 137 164 197 245

Notes:GDP Per Capita of Indonesia 2008 = USD2.246 (source: IMF)


For HIPCs, debt-to-GDP ratio has declined quite significantly from 102% in 1999 to 31% in 2007

Debt write off made debt outstanding to drop off at the level of 90% in average (as on 2007)


Conclusion


79/80

Fiscal deficit requires financing. Debt has long been recognized as thebest policy tool to support liquidity and to refinance matured debt

Debt outstandin accounts rowth in nominal term but debt as a share ofGDP keeps to record a significant decrease and, as our fiscal rule

mandates, it is still in a healthy level Ultimate goal of debt management is to acquire fund with low cost &

risk, with long term maturity, untied to any political agenda

Continuing to achieve sound fiscal policy and debt management: Looking at another developing and even advanced countries performance,

debt indicator of Indonesia stays better and is continuing to be so

Rules and regulations are already installed in place to guaranteeaccountability and transparency of debt management

(Wajar Tanpa Pengecualian/WTP) by the State Audit Board (BPK)

Global crisis has not changed investor expectation and market confidence toIndonesia. Rating upgrade of Moodys from stable to positive in the midst of

68

two things: positive expectation of the economy in the short-to-medium runand the credibility of fiscal policy



80/80

Directorate Evaluation, Accounting and Settlement

Directorate General of Debt ManagementMinistry of Finance of The Republic of IndonesiaJl. Lapangan Banteng Timur 2-4 Jakarta

Tlp: 021-3449230 psw. 5647, 021-3864778Fax: 021-3843712

www.dmo.or.id

Documents

Indonesia Government Debt Profile Per May 2010 English Edition