MINISTRY OF FINANCE OF REPUBLIC OF INDONESIA DIRECTORATE GENERAL OF DEBT MANAGEMENT

Table of Contents Chapter 1

16.

Loan Disbursement 2014 - Project Financing

Backgrounds, Debt Management Objective and Strategy, Debt Instruments, Legal Basis

17.

Loan Disbursement 2014 - Project Financing (Chart)

1.

Backgrounds (1)

2.

Backgrounds (2)

3.

Debt Management Objectives and Strategy

4.

Debt Instruments (1)

5.

Debt Instruments (2)

6.

Debt Management: Legal Basis

Chapter 2 State Budget, Deficit and Its Financing 7.

State Budget (APBN) 2009–2014

8.

Financing Cash flow 2009-2014

9.

Fiscal Deficit and State Budget Financing, 2009-2014

10.

Deficit in Various Countries 2009-2014

11.

Budget and Realization of Debt Financing 2014

12.

Realization of Government Securities Issuance 2014

13.

Loans Drawing by Type of Financing, 2009-2014

14.

Program Loan 2009-2014

15.

External Loan Financing 2009 – 2014

Chapter 3 Debt Portfolio (Outstanding, Maturity Profile, Change in Securities and Loans Positions) 18.

Government Debt Outstanding 2009 – 2014

19.

Government Debt Outstanding 2009 – 2014 (Chart)

20.

Debt Maturity Profile as of September 30, 2014

21.

Government Securities Outstanding 2009 – 2014

22.

Loans Outstanding by Creditor Types

23.

Loans Outstanding by Creditor Types (Chart)

24.

Loans Outstanding by Economic Sectors

25.

Loans Outstanding by Economic Sectors (Chart)

26.

Government Debt Outstanding - Main Currencies

27.

Government Debt Outstanding - Other Currencies

28.

Government Debt Outstanding - by Currencies (Chart)

29.

Government Debt Outstanding – by Status and Numbers of Loans

30.

Loans Drawing Proportion by Financing Type (Chart) Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Table of Contents Chapter 4 Debt Portfolio Management Performance (Debt Performance Measurement and Comparison, Loan Disbursement, Government Debt Securities Re-profiling)

Chapter 5 Costs of Borrowing (Debt Services, Cost of Fund, Yield Curve, External Debt’s Cost) 42.

Debt Services Realizations, Fiscal Year 2013-2014

43.

Debt Services Realizations, Fiscal Year 2014 (Chart)

44.

Interest Payment to Debt Ratio

45.

Interest Payment Realization

Maturity Profile of Tradable Securities as of September 30, 2014

46.

Terms and Conditions of Loan from Multilateral

47.

Terms and Conditions of Loan from Bilateral (Japan)

35.

Debt Switching and Buyback

48.

Domestic Government Debt Securities Yield Curve

36.

Debt Reduction through Debt Swap Scheme

49.

Indonesian Global Bond Yield Curve

37.

Loans Disbursement Performance

38.

External Loan Services to Reserves Ratio

39.

Ratio Debt per Capita, of Some Countries & The Changes 2013-2013

40.

Debt per Capita, of Some Countries & The Changes 2003 - 2013

50.

Average Daily Trading of Domestic Gov’t. Securities

51.

Government Debt Securities Ownership

Debt Risk Indicators, 2009 – 2014

52.

Domestic Debt Government Securities Ownership

31.

Central Government Debt to GDP Ratio

32.

Debt to GDP Ratio, Indonesia & some Countries

33.

Debt to GDP Ratio, Some Countries & The Changes 2004-2014

34.

41.

Chapter 6 Performance of Secondary Market for Govt. Securities (Trading Volume, Govt. Securities’ Ownership Structure)

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Table of Contents 53.

Domestic Debt Government Securities Ownership ( in % )

63.

Indonesia Sovereign Credit Rating Performance (1)

54.

Foreign Ownership of Domestic Government Securities by Tenor

64.

Indonesia Sovereign Credit Rating Performance (2)

55.

Spread over UST- Jan 18

65.

56.

Spread over UST- Feb 23

Government Guarantee Outstanding and Budget Allocation

57.

Spread over UST- Feb 42

66.

58.

Global Bonds Performance: Debut of EURdenominated Bonds Issuance

BPK Opinion on Government Financial Report 2012

67.

Conclusion

59.

Global Bonds Performance: Spread over 7Y Euro Midswap

Chapter 7 Rating, Government Guarantee, Supreme Audit Agency (BPK) Opinion, Conclusion 60.

Credit Rating of Indonesia

61.

Indonesia Credit Rating Performance (1)

62.

Indonesia Credit Rating Performance (2)

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Chapter 1 Background, Debt Management Strategy and Objective, Debt Instruments, Legal Basis

Kementerian Keuangan Ministry of Finance –– Republik Republic Indonesia of Indonesia

Background (1)  Debt management and policy is an integral part of fiscal policy which also constructs economic policy and management in general.  Ultimate objectives of economic management: 

Welfare creation and maintenance in the form of:   



Reducing unemployment. Alleviating poverty. Spurring more growth in the economy.

Security and stability enhancement.

 Debt is materialized if state budget is in deficit.  Deficit financing through debt has been perceived to be a standard approach in most of the countries in a 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. 

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Background (2)  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 by the Government and the Parliament, which is intended for:      

Supporting fiscal stimuli through development activity in infrastructure, agriculture, energy, and another kind of “pump priming” project; Sustaining people’s welfare program such as PNPM, BOS, Jamkesmas, Raskin, PKH, subsidy; Supporting real sector’s 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;  How much upper limit of foreign loans can be received by an economy. 

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Debt Management Strategy and Objective  Objectives Long-term :



 Securing Government Budget debt financing needs at minimum cost and tolerable risk level, thus

fiscal sustainability can be maintained  Supporting efforts to develop a deep, active and liquid Government Securities market.

 Short-term :  Ensuring the availability of funds to cover budget deficit and to meet debt repayment obligations in

a timely and efficient manner

 General Strategies      

optimizing potential sources of financing from domestic market through issuance of IDR denominated Government securities and domestic loan disbursement; developing debt instrument to obtain flexibility in selecting a more suitable, cost-efficient and minimum risk instrument; utilizing foreign loans to finance priority projects, at favorable terms & conditions for the Government, and without having any political agenda from creditors; maintaining the medium term policy of reducing the outstanding of foreign loan; improving coordination with monetary and capital market authorities, particularly to support the financial deepening; improving coordination and communication with various parties to enhance the efficiency of loan management and improve sovereign credit rating

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Debt Instruments (1)  Government Loan consists of external and domestic loans: 

External Loan World Bank, Asian Development Bank, Islamic Development Bank and bilateral donors (Japan, Germany, France, etc.) and Export Credit. Program Loan: Intended for budget support. Its disbursement is a function of the realization of stated policy matrix aiming at the targets set up in MDGs scheme (poverty alleviation, education, and corruption eradication), people empowerment and also policy related with climate change and infrastructure development.  Project Loan : To support infrastructure project in transportation, energy etc and also poverty alleviation project. 



Domestic Loan   

Government Regulation No. 54 Year 2008 on Domestic Loan Procurement Procedure and Domestic Loan Channeling; Coming from state-owned enterprise, local government and local state-owned enterprise; To finance policy related with the effort to support local industry, infrastructure project for public service and investment generating revenue project.

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Debt Instruments (2)  Government securities (SBN) in local and foreign currency denominated,

tradable and non-tradable, fixed and variable:  Government Debt Securities (SUN)  



T-Bills: short-term (up to 1 year); Govt. Bond (> 1 year)  Coupon Bond  Tradable: ORI, FR/VR bond, Global bond  Non tradable: SRBI for bank recap, bond issued for Bank Indonesia’s recap and restructuring of banking industry  Zero coupon

Government Islamic securities/Sukuk (SBSN) in domestic and foreign currency denominated in the scheme of Ijarah, Musyarakah, Istisna, etc  

Islamic T-Bills; IFR/Ijarah Fixed Rate; Global Sukuk; SDHI/Indonesian Haj Fund Sukuk; Project Based Sukuk (PBS).

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Legal Basis  Laws and Regulations: 

     

Law Number 17/2003 on State Finance Law Number 1/2004 on State Treasury Law Number 15/2004 on Inquiry of State Finance Management and Responsibility Law Number 19/2008 on Government Islamic Securities Law Number 24/2002 on Government Securities Government Regulation Number 10/2011 on External Loan Procurement Procedure and Grant Receipt Government Regulation Number 54/2008 on Domestic Loan Procurement Procedure and Domestic Loan Channeling

 Setting up, among other things, good governance principle: Debt cannot be separated from state budget and subject to the approval from parliament  A good policy coordination (MoF, Ministry of Planning & BI) is essential for having sound debt management  Close and efficient supervision on government securities’ trading activities in secondary market by the stock market authority  Accountability and transparency in whole range of debt management span 

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Chapter 2 State Budget, Deficit and Its Financing

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

State Budget (APBN) 2009–2014 [ in Trillion IDR ]

LKPP/Audited A. Revenues and Grants I. Domestic Revenues 1. Tax Revenues 2. Non Tax Revenues / II. Grants B. Expenditures I. Central Government a. Interest Payments - Domestic Currency - Foreign Currency b. Subsidies / II. Transfers to Regions C./ Primary Balance D. / Budget Surplus (Deficit) (A-B) E. Financing I. Debt II. Non Debt Financing Surplus (Deficit)

2009 848.8 847.1 619.9 227.2 1.7 937.4 628.8 93.8 63.8 30.0 138.1 308.6 (5.2) (88.6) 112.6 87.1 25.5 23.9

2010 995.3 992.3 723.3 268.9 3.0 1,042.1 697.4 88.4 61.4 26.9 192.7 344.7 41.5 (46.8) 91.6 86.9 4.6 44.7

2011 1,210.6 1,205.4 873.9 331.5 5.2 1,295.0 883.7 93.2 79.6 13.6 295.3 411.3 8.8 (84.4) 130.9 102.7 28.3 46.6

2012 1,338.1 1,332.3 980.5 351.8 5.8 1,491.4 1,010.6 100.5 70.2 30.3 346.4 480.6 (52.8) (153.3) 175.2 137.0 38.1 21.9

BUDGET-R 2013 2014 1,438.9 1,635.4 1,432.1 1,633.1 1,077.3 1,246.1 354.8 386.9 6.8 2.3 1,650.6 1,876.9 1,137.2 1,280.4 113.0 135.5 98.7 120.6 14.3 14.9 355.0 403.0 513.3 596.5 (98.6) (106.0) (211.7) (241.5) 237.4 241.5 219.3 253.7 18.1 (12.2) 25.7 0.0

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Financing Cash flow 2009-2014 [ in Billions IDR ]

LKPP

Financing Needs Budget Deficit Debt Repayment

Bond Redemptions and Buybacks Foreign Loan Amortization Domestic Loan Amortization On Lending Non Debt Financing Needs

Financing Sources Debt

Government Securities Issuance, Gross Domestic Foreign Foreign Loan Disbursements Program Loans Project Loans to Central Government Project Loans On Lending Domestic Loan Disbursements Non Debt

Financing Surplus (Deficit) Net Financing Cash Flows Net Debt

Government Securities Foreign DomesticLoans Loans Domestic Loans Net Non Debt

BUDGET-R

2009

2010

2011

2012

2013

2014

(236,975)

(203,538)

(245,419)

(357,337)

(393,596)

(493,134)

(88,619)

(46,846)

(84,339)

(153,301)

(211,673)

(241,494)

(120,145)

(135,893)

(138,818)

(178,174)

(164,301)

(233,012)

(49,067) (68,031) (3,047)

(76,532) (50,633) (8,729)

(87,272) (47,323) (4,224)

(123,193) (51,115) (113) (3,753)

(103,075) (57,204) (141) (3,881)

(165,199) (64,160) (245) (3,407)

(28,211)

(20,799)

(22,262)

(25,863)

(17,622) -904

(18,628) -904

260,939

248,243

292,029

379,195

419,317 342311.435

493,135 342311.435

207,200

222,822

241,503

315,214

383,643

486,736

148,538 101,736 46,802 58,662 28,938 26,678 3,047 -

167,634 142,593 25,041 54,795 28,975 17,091 8,729 394

207,136 176,659 30,477 33,747 15,266 14,257 4,224 619

282,897 31,403 15,003 12,647 3,753 913

327,748 55,280 18,426 32,973 3,881 616 750

430,183 54,130 16,900 33,823 3,407 2,423 750

53,740

25,421

50,526

63,981

35,674

6,399

23,965 112,583

44,706 91,551

46,609 130,949

21,858 175,158

25,722 -0.1 237,395

0 -0.1 241,495

87,055

86,929

102,685

137,040

219,342

253,724

99,471 (12,416) -

91,102 (4,567) 394

119,864 (17,799) 619

159,704 (23,464) 800

224,673 161485.7 (5,805) 474

264,984 161485.7 (13,437) 2,178

25,528

4,622

28,264

38,119

18,053

(12,230)

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Fiscal Deficit and State Budget Financing 2009-2014 Since 2005, government securities have played role as a primary instrument of financing Refinancing strategy to achieve a better debt profile explains the movement of government securities in 2009-2013.

  [ in Trilions Rupiah ] 270 250 230 210 190 170 150 130 110 90 70 50 30 10 (10) (30) (50) (70) (90) (110) (130) (150) (170) (190) (210) (230) (250)

[ % to PDB ]

265

4

225 3 160 2

120 99

91 1

38

28

26

18

5 (89)

(12)

(47)

(4) (0.7)

(84) (17)

(153)

(212)

(5)

(23)

(11) (12)

(241) (1)

(1.1) (1.6) (1.9)

(2) (2.3)

(2.4) (3)

(4)

2009

Securities (netto)

2010

Domestic and Foreign Loan (netto)

2011

2012

Non-Debt (netto)

2013

Budget Surplus (Defisit)

2014*

Budget Defic to GDP Ratio (RHS)

Notes : • * BUDGET-R 2014 Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Deficit in Various Countries 2009-2014 4.0 2.0 0.0

-2.0 -4.0 -6.0 -8.0 -10.0 -12.0 -14.0 2009 Brazil

2010 China

Indonesia

2011 Japan

2012 Mexico

Russia

2013 United Kingdom

2014 United States

Source: International Monetary Fund, World Economic Outlook Database, April 2014 & Ministry of Finance Notes : - in % to GDP - For Indonesia, Year 2009–2013 are the audited (LKPP) numbers and 2014 are Budget-R numbers



Fiscal deficit in Indonesia is lower than other countries.



Fiscal rule stated on Law Number 17/2003 has fixed upper limit of deficit in the level of 3% of GDP. In consequence, additional debt to finance fiscal deficit is also limited. Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Budget and Realization of Debt Financing 2014 (in billions IDR)

No.

Description (2)

(1)

Budget-R (3)

Realization *) as of September 30, 2014 Nominal

%

(4)

(5) = (4) : (3)

rest of budget Nominal

%

(6) = (3) - (4)

(7) = (6) : (3)

A. Expenditures

135,453.2

103,351.7

76.3

32,101.5

23.7

1

Domestic Interest Payments

120,566.2

93,596.8

77.6

26,969.4

22.4

2

External Interest Payments

14,887.0

9,754.9

65.5

5,132.1

253,724.0

240,938.3

95.0

12,785.7

34.5 5.0

267,161.7

258,220.0

96.7

8,941.7

3.3

2,178.0

261.6

12.0

1,916.4

88.0

B. Financing I

Domestic Financing A. Domestic Loans (Net) 1. Domestic Loan Disbursement 2. Principle Payment of Domestic Loan

II

B. Net Securities External Financing (Net) 1. External Loan Disbursement (Gross) a. Program Loan b. Project Loan 1. Central Government Project Loan 2. On Lending

2. On Lending (Spending) 3. External Loan Amortization

2,423.4 (245.4)

332.2 (70.6)

13.7 28.8

2,091.2 (174.8)

86.3 71.2

264,983.7 (13,437.7) 54,129.6

257,958.4 (17,281.6) 25,251.2

97.3 128.6 46.6

7,025.3 3,843.9 28,878.4

2.7 (28.6) 53.4

16,899.6 37,230.0 33,822.6 3,407.4

4,393.9 20,857.3 19,126.1 1,731.2

26.0 56.0 56.5 50.8

12,505.7 16,372.7 14,696.5 1,676.2

74.0 44.0 43.5 49.2

(3,407.4) (64,159.9)

(1,731.2) (40,801.7)

50.8 63.6

(1,676.2) (23,358.2)

49.2 36.4

Notes: *) Include Commitment Fee Rp 304,93 Billions Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Realization of Government Securities Issuance 2014 Description

Target

Target APBN-P

Realization Nominal (as of Sept 30, 2014)

% Realization

SBN Netto (APBN 2014)

205,068,831

264,983,700

257,958,361

97.35%

SBN Jatuh Tempo 2014

164,764,045

164,800,045

119,289,856

3,000,000

3,000,000

970,968

72.38% 32.37%

369,832,876

429,783,745

377,248,217

87.78%

- Rencana Buyback

Kebutuhan Penerbitan 2014 (Gross)* SUN SUN Domestik - ON - SPN - SPNNT 20140303 - SUN RITEL SUN Valas - Sun Valas - Sun Valas Domestik SBSN SBSN Domestik SBSN Valas

304,702,469 236,490,885 183,200,000 38,500,000 12,400,000 2,390,885 68,211,584 68,211,584 72,545,748 54,799,345 17,746,403

* Adjusted by changes in Cash Management & Debt Switch Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Loan Drawing by Type of Financing, 2009-2014 [in Trillions IDR]

LKPP TYPE OF FINANCING

2009

2010

2014

2011

2012

2013 *)

Real. As of September Budget-R Nominal

TOTAL

%

58.66

55.19

34.37

32.32

50.05

56.55

25.58

6.24

5.51

3.79

3.34

4.51

4.88

2.18

28.94

28.97

15.27

15.00

18.39

16.90

4.39

in billion US$

3.08

3.22

1.68

1.55

1.55

1.51

0.38

a. World Bank

14.65

15.34

10.76

8.62

9.60

9.34

3.15

33.7%

b. A D B

5.06

6.39

3.63

5.81

4.90

4.64

-

0.0%

c. JAPAN

6.07

4.59

0.87

-

3.89

-

0.0%

d. FRANCE

2.79

2.73

-

-

-

1.16

1.24

-

-

-

0.57

-

-

-

29.72

25.82

18.48

16.40

31.12

37.23

20.86

3.16

2.87

2.04

1.70

2.91

3.21

1.78

-

0.39

0.62

0.91

0.54

2.42

0.33

-

0.04

0.07

0.09

0.05

0.21

0.03

in billion US$

1. Program Loan

e. IDB

2. Project Loan in billion US$

3. Domestic Loan in billion US$

45.2% 26.0%

107.2% 0.0%

56.0% 13.7%

Kementerian Ministry Kementerian of Finance Keuangan Keuangan – Republic – –Republik Republik of Indonesia Indonesia

Program Loan 2009-2014 [ in Millions USD]

LENDERS A. WORLD BANK 1 2 3 4

Realization 2010 1,704

2011 1,011

2012 907

Local Government Decentralization Project (LGDP) PNPM Refinancing Road Assets Preservation Program Financial Sector and Investment Climate Reform and Modernization Development Policy Loan

B. ASIAN DEVELOPMENT BANK

2014 2013 Budget Budget-R 800

Real

400

806

274

120 240 40

40 266

49 225

500 700

400

600

400

-

1 Strengthening Investment for Growth Acceleration Program (SIGAP)

400

-

400

C. JICA, JAPAN

505

100

-

352

-

-

-

D. FRANCE - AFD

300

-

-

-

-

100

101

100

101

200

-

1 Connectivity (Carry over 2013) E. GERMANY - KFW

-

-

-

-

-

SIGAP (Co-Financing dengan ADB) TOTAL

200 3,209

1,511

1,566

1,552

400

1,506

375

*) As of September 30, 2014 Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

External Loan Financing 2009 - 2014 2009 70

2010

2011

2013*

2014**

55.6

46.1

50

42.3 29.5

30

[ in trillion IDR ]

2012

37.9

27.7

10

-10 -30

-12.4

-4.6 -17.8

-50

-47.3

-50.6 -70

-23.5

-16.9

-51.1

-20.9

-58.8

-59.2

-68.0

-90 External Loan Disbursement, gross

External Loan Principal Repayment

External Loan Financing (nett)

[ in trillion IDR ] 2009

2010

2011

2012

2013*

2014**

External Loan Disbursement, gross

55.62

46.07

29.52

27.65

42.34

37.91

External Loan Principal Repayment

(68.03)

(50.63)

(47.32)

(51.11)

(59.21)

(58.81)

External Loan Financing (nett)

(12.42)

(4.57)

(17.80)

(23.46)

(16.87)

(20.90)

Notes : *) Budget-R 2013 **) Budget 2014 Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Loan Disbursement 2014 - Project Financing BUDGET COUNTRY

A. Int'l Organization

Million USD

Real. As of September 30, 2014

Billion IDR

Million USD

Billion IDR

% to BUDGET

828.37

8,697.85

321.36

3,769.52

9.6%

WORLD BANK (IBRD & IDA)

423.92

4,451.11

265.18

3,105.02

7.9%

ADB

135.95

1,427.49

39.60

466.21

1.2%

IDB

249.92

2,624.20

11.04

134.07

0.3%

18.58

195.06

5.54

64.22

0.2%

2,527.13

26,534.89

1,456.08

17,087.76

43.4%

JAPAN

830.33

8,718.49

173.81

2,020.23

5.2%

CHINA

146.61

1,539.42

63.97

751.76

1.9%

FRANCE

29.36

308.24

236.16

2,761.13

7.0%

KOREA

198.80

2,087.38

191.25

2,227.31

5.7%

13.22

138.76

14.14

165.10

0.4%

5.72

60.04

24.51

285.87

0.7%

1,303.10

13,682.56

752.24

8,876.37

22.4%

3,355.50

35,232.74

1,777.43

20,857.29

53.0%

IFAD B. Country

AUSTRALIA SPAIN OTHERS TOTAL

Kementerian Ministry Kementerian of Finance Keuangan Keuangan – Republic – –Republik Republik of Indonesia Indonesia

Loan Disbursement 2014 - Project Financing (chart) [ % of Project Loan ]

[ in billions IDR ] 10,000

22.4%

25.0%

9,000 8,000

20.0%

7,000 6,000

15.0%

5,000 4,000

7.9%

7.0%

3,000

5.2%

2,000 1,000

1.2%

10.0% 5.7%

5.0%

1.9% 0.3%

0.4%

0.2%

0.7%

-

0.0%

Disbursement

BUDGET COUNTRY Million USD Billion IDR TOTAL

3,355.50

35,232.74

% to Budget (RHS)

Real. As of September 30, 2014 Million USD 1,777.43

% to Billion IDR BUDGET 20,857.29

53.0%

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Chapter 3 Debt Portfolio (Outstanding, Maturity Profile, Change in Securities and Loans Positions)

Kementerian Ministry Keuangan Finance Republik Indonesia Ministryofof Finance–––Republic Republicof ofIndonesia Indonesia

Government Debt Outstanding, 2009-2014 2009

2010

2011

2012

2013

August 2014 #)

#

September 2014 ) Nominal

Central Govt. Debt Total (in trillion IDR)

%

1,590.66

1,681.66

1,808.95

1,977.71

2,375.50

2,531.81

2,601.72

100.0%

a. Loans (in trillion IDR) 1). External Loan Bilateral *) Multilateral **) Commercial ***) Suppliers ***) 2). Domestic Loan

611.20

617.25

621.29

616.61

714.44

674.07

683.80

26.3%

611.20

616.86

620.28

614.81

712.17

671.53

681.26

26.2%

387.92

380.67

381.66

359.80

383.53

356.64

355.76

13.7%

202.37

208.28

212.96

230.23

288.29

270.82

279.97

10.8%

20.24

27.34

25.15

24.37

40.00

43.81

45.27

1.7%

0.66

0.57

0.50

0.41

0.35

0.26

0.26

0.0%

-

0.39

1.01

1.80

2.27

2.54

2.54

0.1%

b. Securities (in trillion IDR)

979.46

1,064.40

1,187.66

1,361.10

1,661.05

1,857.74

1,917.92

73.7%

143.15

161.97

195.63

264.91

399.40

415.98

450.34

17.3%

836.31

902.43

992.03

1,096.19

1,261.65

1,441.76

1,467.58

56.4%

169.22

187.04

199.49

204.52

194.89

216.08

213.05

100.0%

88.97

100.37

109.40

113.36

103.51

123.05

120.18

56.4%

15.23

18.02

21.57

27.39

32.77

35.50

36.88

17.3%

0.04

0.11

0.19

0.19

0.22

0.21

0.1%

65.02

68.61

68.40

63.58

58.43

57.31

55.79

26.2%

9,400

8,991

9,068

9,670

12,189

11,717

12,212

##

Foreign Currency ) Local Currency Central Govt. Debt Total (In billion US$) Consist of :

Local Currency Securities Foreign Currency Securities Local Currency Loan

(in billion US$) (in billion US$)

(in billion US$)

Foreign Currency Loan

(in billion US$)

Exchange Rate (IDR to US$1)

Notes : * Semi commercials included ** Some semi commercials included *** Commercials

-

#) ##)

Provisional Include Domestic Global Bond Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Government Debt Outstanding, 2009-2014 (chart) [ in Trillions IDR ]

2,700

2,200

684 714

1,700

1,200

617 621

617

611

1,918

1,661 700

979

1,064

1,188

2009

2010

2011

1,361

200

2012

Loans

2013

2014*)

Securities [ in trillions IDR and % ]

Year

2009

2010

2011

2012

2013

2014*)

Loans

611

38%

617

37%

621

37%

617

31%

714

26%

684

26%

Securities

979

62%

1,064

63%

1,188

63%

1,361

69%

1,661

74%

1,918

74%

1,591

100%

1,682

100%

1,809

100%

1,978

100%

2,375

100%

2,602

100%

Central Govt. Debt Total Notes : *) Provisional

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Debt Maturity Profile as of September 30, 2014 [in Trillions IDR] 250

200 29 56

65

150

4

63

39

56 52

58

45

35

100

98

99

21 43

42

48

53

12

69

22

12

12

29

31

47

53

69

2 4 25

Loans

2035

2034

2033

2032

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

-

3 10

42

1 48

Securities

1 8

1 10

2041-2055

93

2040

101

2039

86

11

2038

98

149

8

15

2037

22

13 18

25

2031

50

118

2030

126

2036

162 139

Year Loans Securities

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 35% 34% 39% 40% 36% 29% 36% 31% 25% 26% 15% 65% 66% 61% 60% 64% 71% 64% 69% 75% 74% 85%

2025 36% 64%

2026 49% 51%

2027 28% 72%

Year Loans Securities

2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 22% 15% 30% 28% 20% 18% 10% 15% 23% 5% 3% 78% 85% 70% 72% 80% 82% 90% 85% 77% 95% 97%

2039 12% 88%

2040 2040-2055 9% 3% 91% 97%

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Government Securities Outstanding 2009 – 2014 GOVERNMENT SECURITIES A. Tradable 1. Rupiah Denominated a. Government Debt Securities (SUN) 1) T-Bill 2) Zero-coupon bond 3) Fixed Rate bond +) 4) Variable Rate bond b. Government Islamic Securities (SBSN) 1) Fixed Rate Islamic bond ++) 2) T-Bill Syariah 2. Foreign Currency Denominated a. Government bond (million US$) +++) b. Islamic bond (million US$) c. Government bond (million JPY) d. Government bond (million EUR) B. Non Tradable a. Promissory note to central bank b. T-Bill (Private Placement) c. Government Islamic Securities d. SPPNNT20140303 e. SBR001 TOTAL GOVERNMENT SECURITIES (A +B)

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Aug-14

30-Sep-14

724,898

803,191

919,236

1,085,173

1,394,652

1,589,553

1,649,731

581,748

641,215

723,606

820,266

995,252

1,173,570

1,199,395

570,215 24,700 8,686 393,543 143,286

615,498 29,795 2,512 440,396 142,795

684,618 29,900 2,512 517,142 135,063

757,231 22,820 1,263 610,393 122,755

908,078 34,050 751,273 122,755

1,069,951 36,100 911,096 122,755

1,089,951 36,100 931,096 122,755

11,533 11,533

25,717 25,717

143,150

161,976

38,988 37,668 1,320 195,630

63,035 62,840 195 264,907

87,174 78,541 8,633 399,400

103,619 97,529 6,090 415,983

109,444 99,504 9,940 450,336

14,200

16,200

18,700

22,950

27,140

29,190

29,190

650

650

1,650

2,650

4,150

3,500

5,000

35,000

95,000

95,000

155,000

155,000

-

-

-

-

-

155,000 1,000

155,000 1,000

254,561

261,215

268,419

275,927

266,403

268,188

268,188

251,875

248,432

244,636

240,144

234,870

230,600

230,600

-

-

-

-

-

-

-

2,686

12,783

23,783

35,783

31,533

35,197

35,197

-

-

2,391

2,391

979,459

1,064,406

1,187,655

1,361,101

1,661,055

1,857,741

1,917,919

9,400 101.70

8,991 110.29

9,068 116.80

9,670 111.97

12,189 116.17

11,717.00 112.97 15,444.18

12,212.000 111.70 15,494.59

Notes: - Nominal on billion IDR - ***) Indexation Value -

+)

-

++)

-

+++)

Includes ORI Includes Sukuk Ritel Includes Domestic Global Bond

- Asumsi Kurs (IDR/US$1) - Asumsi Kurs (IDR/JPY1) - Asumsi Kurs (IDR/EUR1)

Kementerian Keuangan Ministry––of Republik FinanceIndonesia Ministry of Finance Republic of– Republic Indonesiaof Indonesia

Loans Outstanding by Creditor Types [ in trillions IDR ]

As of Sept 30, 2014 COUNTRIES

2009

2010

2011

2012

2013 Nominal

% Total

EXTERNAL LOAN

611.20

616.86

620.28

614.81

712.17

681.26

99.6%

1. BILATERAL

387.92

380.67

381.66

359.80

383.53

355.76

52.0%

259.50

274.47

280.45

256.10

254.71

232.67

34.0%

b. France

25.56

21.88

20.90

21.30

25.94

24.99

3.7%

c. Germany

28.34

22.65

20.29

20.00

23.71

20.40

3.0%

d. Other Bilateral

74.52

61.68

60.02

62.39

79.17

77.71

11.4%

202.37

208.28

212.96

230.23

288.29

279.97

40.9%

94.96

102.23

108.73

122.53

163.77

166.62

24.4%

102.32

100.40

97.92

100.37

114.58

104.06

15.2%

c. IDB

2.96

3.76

4.23

5.09

7.22

6.73

1.0%

d. Other Multilateral

2.13

1.89

2.09

2.24

2.73

2.56

0.4%

20.24

27.34

25.15

24.37

40.00

45.27

6.6%

0.66

0.57

0.50

0.41

0.35

0.26

0.0%

0.39

1.01

1.80

2.27

2.54

0.4%

617.25

621.29

616.61

714.44

683.80

100.0%

a. Japan

2. MULTILATERAL a. World Bank

*)

b. ADB

3. COMMERCIAL BANKS 4. SUPPLIERS DOMESTIC LOAN TOTAL*)

611.20

Notes : *) Global Bonds excluded. Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Loans Outstanding by Creditor Types (chart) 100%

90%

17%

16%

16%

16%

17%

18%

16%

16%

15%

23%

24%

36%

34%

2013

September 2014

80%

70%

20%

60%

50% 40% 30%

20%

42%

45%

45%

42%

10%

0%

2009

Japan Other Bilateral IDB SUPPLIERS

2010

2011

France World Bank Other Multilateral Domestic Loan

2012

Germany ADB COMMERCIAL

Multilateral (World Bank, ADB) and Bilateral (Japan) external loan are long matured & relatively cheap financing sources alternatives Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Loans Outstanding by Economic Sectors [ in billions IDR ]

2009 Agriculture, Husbandry, Forestry & Fishing

2010

2011

2012

2013

2014 *)

16,773

19,946

19,593

17,369

19,124

17,980

Mining & Drilling

7,294

7,620

7,479

7,052

7,138

6,500

Manufacturing

21,534

19,946

18,483

14,916

14,027

12,255

Electricity, Gas & Water Works

51,442

53,408

53,145

49,532

51,488

46,424

115,160

113,448

114,340

112,227

122,628

114,273

Trading, Hotel & Restaurant

7,717

6,990

6,290

5,276

4,801

4,273

Transport & Communication

22,257

21,476

20,001

20,176

20,764

18,610

Financial, Leasing and Financial Services

81,995

86,422

88,092

98,963

127,770

122,263

Services

145,353

153,544

163,684

168,519

214,405

221,487

Other Sectors

141,673

134,452

130,185

122,575

132,295

119,732

611,198

617,252

621,292

616,605

714,441

683,796

Housing & Building

TOTAL Source : Ministry of Finance & Bank Indonesia

Notes : *) As of September 30, 2014 - Economic Sectors Classification by Bank Indonesia and National Statistics Agency - Financial Sector is program loan dominated Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Loans Outstanding by Economic Sectors (chart) Source : Ministry of Finance & Bank Indonesia [ in billions IDR ]

214,405

2010

2011

Agriculture, Husbandry, Forestry & Fishing Manufacturing Housing & Building Transport & Communication Services

2013

119,732

122,263

114,273 17,980 6,500 12,255 46,424

4,273 18,610

132,295

127,770

122,628

4,801 20,764

19,124 7,138 14,027 51,488

98,963

112,227

5,276 20,176

17,369 7,052 14,916 49,532

2012

122,575

163,684 130,185

6,290 20,001

19,593 7,479 18,483 53,145

88,092

114,340

153,544 134,452 86,422

113,448

2009

6,990 21,476

19,946 7,620 19,946 53,408

81,995

115,160 7,717 22,257

16,773 7,294 21,534 51,442

100,000

-

145,353 141,673

150,000

168,519

200,000

50,000

221,487

250,000

2014 *)

Mining & Drilling Electricity, Gas & Water Works Trading, Hotel & Restaurant Financial, Leasing and Financial Services Other Sectors

Notes : *) As of September 30, 2014 Ministry of Finance – Republic Keuangan of Indonesia – Republik Indonesia Ministry ofKementerian Finance – Republic of Indonesia

Government Debt Outstanding by Main Currencies 2009

2010

2011

2012

2013

2014***

836.31

902.82

992.84

1,097.99

1,263.93

1,470.12

USD**)

35.80

39.77

44.35

49.83

56.77

60.09

JPY**)

2,713.84

2,698.75

2,585.42

2,511.84

2,395.29

2,270.16

EUR**)

5.97

5.44

4.71

4.49

4.23

5.16

SDR**)

2.01

2.15

2.19

2.17

2.07

1.98

AUD**)

0.24

0.29

0.33

0.40

0.45

0.46

in original currencies IDR*)

Other Currencies

-------------------------- Other Currencies --------------------------

in trillion IDR IDR

836.31

902.82

992.84

1,097.99

1,263.93

1,470.12

USD

336.54

357.61

402.16

481.86

691.97

733.79

JPY

276.01

297.62

301.98

281.23

278.26

253.58

EUR

80.68

64.99

55.30

57.54

71.11

79.92

SDR

29.57

29.83

30.44

32.41

38.93

35.98

AUD

2.05 29.49 1,590.66

2.66 26.13 1,681.66

3.05 23.18 1,808.95

4.03 22.65 1,977.71

4.85 26.45 2,375.50

4.92 23.42 2,601.72

Mid Rate IDR to US$1

9,400.00

8,991.00

9,068.00

9,670.00

12,189.00

12,212.00

Mid Rate JPY to US$1

92.42

81.53

77.64

86.37

104.92

109.33

Mid Rate EUR to US$1

0.70

0.75

0.77

0.75

0.72

0.79

Other Currencies Total

Notes : *) IDR Currency in Trillion IDR,

**) in Billions,

***) As of September 30, 2014 Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Government Debt Outstanding by Other Currencies 2009

2010

2011

2012

2013

2014**

0.20 0.16 0.17 0.33 0.00 0.06 0.51

0.27 0.14 0.16 0.30 1.43 0.05 0.46

0.30 0.13 0.15 0.27 1.55 0.05 0.41

0.34 0.11 0.14 0.24 1.55 0.04 0.36

0.38 0.09 0.45 0.21 1.55 0.04 0.31

0.37 0.07 0.12 0.19 1.55 0.03 0.28

184.82 0.01 0.13 1.12

184.32 0.01 0.12 0.71

196.63 0.01 0.11 0.42

213.32 0.01 0.10 0.21

219.57 0.01 0.09 0.10

213.32 0.01 0.08 0.04

2.90 1.50 1.49

3.69 1.30 1.41

4.22 1.16 1.31

5.09 1.06 1.35

7.22 1.09 1.48

6.73 0.85 1.32

3.02 0.00 0.10 7.69 1.49 0.43 0.32 10.56

2.83 1.94 0.08 6.36 1.47 0.37 0.28 6.39

2.62 2.23 0.07 5.77 1.54 0.20 0.26 3.78

2.55 2.38 0.07 5.66 1.93 0.30 0.26 1.99

2.92 3.10 0.08 6.19 2.53 0.32 0.29 1.23

2.50 3.08 0.07 5.46 2.47 0.23 0.26 0.46

in original currencies ACU*) ADB*) CAD*) CHF*) CNY*) DKK*) GBP*) KRW*) KWD*) SAR*) WBD*) in trillion IDR ACU ADB CAD CHF CNY DKK GBP KRW KWD SAR WBD TOTAL

Notes : *) in Billions,

29.49

26.13

23.18

22.65

26.45

23.42

**) As of September 30, 2014 Kementerian Ministry Keuangan Finance Republik Indonesia Ministryofof Finance–––Republic Republicof ofIndonesia Indonesia

Government Debt Outstanding by Currencies (chart) 100%

2%

2%

5%

2%

4%

1%

1% 2%

3%

2%

90% 80%

18%

17%

3%

17%

14%

12%

29%

70% 60%

3%

1% 2%

1%

2%

3% 10%

28%

21%

21%

22%

24%

53%

54%

55%

56%

53%

57%

2009

2010

2011

2012

2013

2014*)

50% 40% 30%

20% 10% 0%

IDR

USD

JPY

EUR

SDR

AUD

Others

Notes : *) As of September 30, 2014 Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

1%

Government Debt Outstanding by Status and Numbers of Loans ACTIVE CREDITOR COUNTRY

Numbers of Loans

FULLY DISBURSED

Outstanding (in Billions IDR)

Numbers of Loans

TOTAL

Outstanding (in Billions IDR)

Numbers of Loans

Outstanding (in Billions IDR)

%

EXTERNAL DEBT

187

106,786

1382

574,474

1569

681,260

99.6%

1. COUNTRY

110

64,547

1022

336,741

1132

401,288

58.7%

a. Japan

37

18,357

307

215,079

344

233,436

34.1%

b. France

14

7,677

96

24,365

110

32,042

4.7%

c. Germany

6

2,086

69

19,014

75

21,100

3.1%

d. United States

6

5,408

176

13,627

182

19,035

2.8%

e. Netherland

4

2,712

47

10,194

51

12,906

1.9%

f. Others Country

43

28,306

327

54,462

370

82,769

12.1%

77

42,239

360

237,733

437

279,973

40.9%

a. World Bank

31

27,263

150

139,361

181

166,625

24.4%

b. ADB

17

10,442

161

93,617

178

104,059

15.2%

c. IDB

24

3,461

34

3,264

58

6,725

1.0%

d. IFAD

5

1,072

4

703

9

1,775

0.3%

e. EIB

0

-

2

502

2

502

0.1%

f. NIB

0

-

9

286

9

286

0.0%

DOMESTIC DEBT

26

489

83

TOTAL

213

107,275

2. INTERNATIONAL ORGANIZATION

1465

2,047

109

2,536

0.4%

576,521

1678

683,796

100.0%

Notes : *) As of September 30, 2014 Kementerian Ministry Keuangan Finance Republik Indonesia Ministryofof Finance–––Republic Republicof ofIndonesia Indonesia

Loans Drawing Proportion by Financing Type [ in trillion IDR]

[%]

40

70%

35

60%

30

50%

2009

36.85

2010

2011

30%

2012

2013

2.42

16.90

0.62

18.43

-

40%

20%

15.00 16.40

15.27 18.48

5

28.97

10

28.94

15

25.82

29.72

20

37.23

25

10% 0%

2014*

PROGRAM LOAN

PROJECT LOAN

DOMESTIC LOAN

% PROGRAM LOAN (RHS) [in trillion IDR]

TYPE OF LOANS

2009

%

2010

%

2011

%

2012

%

2013

%

2014*

%

PROGRAM LOAN

28.94

49%

28.97 53%

15.27 44%

15.00 46%

18.43 33%

16.90 30%

PROJECT LOAN

29.72

51%

25.82 47%

18.48 54%

16.40 51%

36.85 66%

37.23 66%

DOMESTIC LOAN

-

0%

TOTAL

58.66

0.39 55.19

1%

0.62 34.37

2%

0.91 32.32

3%

0.62 55.90

1%

2.42

4%

56.55

Notes : - LKPP - Audited *) Budget-R 2014 Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Chapter 4

Debt Portfolio Management Performance (Debt Performance Measurement and Comparison, Loan Disbursement, Government Debt Securities Re-profiling)

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Central Government Debt to GDP Ratio [ %]

[ in Trillions IDR] 10,000

100%

9,000

90%

8,000

80%

7,000

70%

6,000

60%

5,000

50%

4,000

40%

3,000

28.3%

17.4%

2,000 1,000

10.9%

25.6%

30%

26.2%

26.1%

24.4%

24.0%

16.5%

16.0%

16.5%

18.3%

18.9%

9.6%

8.4%

7.5%

7.9%

6.6%

0

20% 10% 0%

2009

2010

2011

2012

2013

2014*)

Loans

Securities

GDP

Loan to GDP Ratio (RHS)

Securities to GDP Ratio (RHS)

Total Debt to GDP Ratio (RHS)

[ in trillions IDR ]

Loans Securities Total GDP

2009 611 979 1,591 5,613

2010 617 1,064 1,682 6,443

2011 621 1,188 1,809 7,427

2012 617 1,361 1,978 8,242

2013 714 1,661 2,375 9,084

2014*) 669 1,907 2,576 10,063

Sources: Ministry of Finance and National Statistics Agency, processed data

Notes : *) BUDGET-R 2014 Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Debt to GDP Ratio, Indonesia & some Countries 300.0 250.0 200.0 150.0 100.0 50.0 0.0

2004

2014

Source: IMF, World Economic Outlook Database, April 2014 & Ministry of Finance

Notes : - Nominal in % to GDP



The debt rises of Developed Countries are greater than those of Developing Countries Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Debt to GDP Ratio, Some Countries & The Changes 2004-2014 Indonesian debt per capita is among the lowest compared to those of developed countries with the fastest/biggest decrease -60.0

-10.0

40.0

90.0

140.0

Indonesia Turkey Philippines Colombia India Brazil Thailand Chile Poland South Africa Germany Malaysia Italy Japan United States Australia United Kingdom Notes : - Nominal in % to GDP Source: World Economic Outlook Database (IMF) Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Maturity Profile of Tradable Securities as of September 30, 2014 [ in Trillion IDR] 120.00

100.00

80.00

60.00

40.00

20.00

TOTAL SUKUK USD SUKUK IDR

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 2041 2042 2043 2044 40.3 111. 88.0 76.1 89.8 124. 76.8 81.3 99.7 85.0 144. 27.5 19.6 45.1 50.2 61.7 25.6 27.1 42.8 47.8 64.1 19.5 4.11 34.8 40.0 -

-

-

-

12.2 18.3

1.74 22.6 14.9 20.4 8.71

SUN JPY

-

-

-

-

-

SUN EUR

-

-

-

-

-

SUN USD

-

SUN IDR

-

-

-

12.2

-

18.3

-

-

-

-

-

-

-

-

-

-

-

2.55

-

1.22

-

-

1.55

-

3.79

-

-

2.18

-

-

-

-

-

-

6.70

-

-

-

-

-

-

-

-

-

-

-

-

-

-

15.4

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

19.5

-

-

-

3.91 6.70

-

-

12.2 10.9 18.8 23.2 24.4 24.4 30.5 24.4 30.5 24.4

38.5 76.9 62.0 36.8 45.7 77.7 43.2 35.3 55.1 54.5 101. 26.0 19.6 41.4 50.2 61.7 23.5 27.1 42.8 47.8 64.1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

9.84

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

18.3 24.4

-

-

-

6.40 15.6

-

-

-

4.11 10.1

13.5 39.4 28.1 34.2

27.4 18.3 24.4

13.5 12.0

-

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

9.80

Debt Switching and Buyback Debt Switching : debt management program to reduce refinancing risk Tenor of Source Bonds (Year)

Destination Bonds (Yaer)

Volume of Bid Accepted (billion IDR)

Year

Auction Frequency

2005

1

< 1 tahun s.d. 4 tahun

15 tahun

2006

12

< 1 tahun s.d. 5 tahun

5 s.d. 19 tahun

31,179

2007

9

< 1 tahun s.d. 6 tahun

11 s.d. 20 tahun

15,782

2008

2

< 1 tahun s.d. 4 tahun

14 s.d. 15 tahun

4,571

2009

6

< 1 tahun s.d. 5 tahun

12 s.d. 15 tahun

2,938

2010

6

< 1 tahun s.d. 8 tahun

10 s.d. 21 tahun

3,920

2011

4

< 1 tahun s.d. 4 tahun

15 tahun

2012

4

< 1 tahun s.d. 5 tahun

10 s.d. 15 tahun

2013

5

< 1 tahun s.d. 9 tahun

5 s.d. 15 tahun

1,976

2014*

3

< 1 tahun s.d. 5 tahun

5 s.d. 20 tahun

4,979

Total

5,673

664 11,859

83,541

Buyback : debt management program which objectives are stabilizing the market, managing portfolio of debt and reducing Government Debt Securities outstanding which issued with high coupon Te nor of Se rie s to be Buyba ck (Ye a r)

Volume of Buyba ck Acce pte d (billion IDR)

Ye a r

Auction Fre que ncy

2003

2

1-2

12.88% 11.02% 10.74% 5.41% 5.20%

6.06% 5.60%

5.41% 5.55%

14.70% 14.84% 15.47% 15.57% 15.30% 15.34% 4.48% 6.67%

4.78%

6.82%

2.96% 7.06%

Dec-2013 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014

>2-5

>5-10

>10

2.81% 6.10%

2.56% 5.91%

3.55% 5.16%

0.00%

Jul-2014 Aug-2014 30-Sep-14

% Foreign Ownership to Total (RHS)

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Spread over UST- Dec 19 600 INDO 19

TURK 19

PHIL 19

BRAZ 19

DATE

Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 30-Sep-14

MEX 19

400

INDO 19

UST 19

4.33 4.25 4.41 3.80 3.68 3.58 3.09 3.20 3.175 3.059 3.399

TURK 19

1.34 1.74 1.52 1.51 1.70 1.63 1.48 1.54 1.675 1.535 1.653

PHIL 19

4.49 4.96 5.11 4.37 4.44 3.92 3.57 3.65 3.614 3.51 4.051

2.83 2.87 2.88 2.74 2.72 2.59 2.44 2.47 2.463 2.351 2.587

BRAZ 19

3.08 3.15 3.34 2.89 3.02 2.70 2.45 2.50 2.649 2.33 2.788

MEX 19

2.71 2.73 2.67 2.44 2.41 2.38 2.19 2.20 2.369 2.223 2.523

200

0 7-Apr-14

29-Apr-14

21-May-14

12-Jun-14

4-Jul-14

26-Jul-14

17-Aug-14

8-Sep-14

30-Sep-14

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Spread over UST- MAY 24 450

350

Date Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 30-Sep-14

BRA 24 4.89 4.67 4.47 4.23 3.86 3.87 3.99 3.70 4.16

TURK 24 5.99 5.46 5.26 4.81 4.53 4.55 4.50 4.32 4.90

PHIL 24 4.02 3.77 3.78 3.73 3.29 3.48 3.44 3.30 3.48

INDO 24 5.55 4.91 4.90 4.78 4.28 4.50 4.23 4.05 4.47

UST 24 2.65 2.62 2.69 2.62 2.42 2.47 2.50 2.33 2.47

MEX 23 4.12 3.82 3.82 3.64 3.32 3.34 3.46 3.19 3.54

BRA 24

TURK 23

PHIL 24

INDO 24

MEX 23

250

150

50

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Spread over UST- MAY 44 600

COLM 41 TURK 43

BRAZ 41

DATE

INDO 44

COLM 41

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 30-Sep-14

MEX 44

400

5.57 5.69 5.42 5.27 5.08 4.79 4.79 4.83 4.55 4.93

BRAZ 41

5.82 5.96 5.72 5.51 5.26 5.03 5.10 5.18 4.78 5.37

INDO 44

TURK 43

6.10 6.25 6.16 6.05 5.95 5.49 5.68 5.41 5.24 5.55

MEX 44

6.67 6.70 6.27 5.95 5.48 5.22 5.27 5.22 5.06 5.54

5.36 5.47 5.15 5.05 4.90 4.61 4.61 4.68 4.41 4.77

UST 44

3.97 3.60 3.58 3.56 3.46 3.33 3.36 3.32 3.07 3.19

200

0 5-Oct-13

14-Nov-13

24-Dec-13

2-Feb-14

14-Mar-14

23-Apr-14

2-Jun-14

12-Jul-14

21-Aug-14

30-Sep-14

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Global Bonds Performance: Debut of EUR-denominated Bonds Issuance Summary Terms of Offering

RI0124

RI0144

Issuer

RIEUR0721

INDO SUKUK GLOBAL-24

Republic of Indonesia

Issuer Ratings

BB+ l Baa3 l BBB-

Issue Ratings

Baa3 (Moody's) / BB+ (S&P) / BBB- (Fitch)

Issue

USD fixed rate

USD fixed rate

EUR fixed rate

USD fixed rate

Size

USD2 billion

USD2 billion

EUR1 billion

USD1.5 billion

7 January / 15 January 2014

7 January / 15 January 2014

2 July / 8 July 2014

3 September / 10 September 2014

Pricing / Settlement Date Maturity

10 years due 15 January 2024 30 years due 15 January 2044

7 years due 8 July 2021

10 years due 10 September 2024

Coupon

5.875% payable semi annually 6.75% payable semi annually

2.875% payable annually

4.35% payable semi annually

2.976% / 99.370%

4.35% / 100%

Reoffer Yield / Price

5.95% / 99.441%

6.850% / 98.734%

Format Listing Total Book Order

Distribution

Investor Type

Rule 144A / Reg S SGX-ST

SGX-ST

SGX-ST & Frankfurt Open Market

SGX-ST

USD10 billion

USD7.5 billion

EUR6.7 billion

USD10 billion

Indonesia 11%, Asia 6%, Europe 17%, USA 66%

Indonesia 3%, Asia 11%, Europe 16%, USA 70%

Indonesia 2.4%, Asia 21.6%, Europe 47%, USA 18%, Others 11%

Indonesia 10%, Asia 20%, Europe 15%, USA 20%, Far Eastern & Syariah 35%

Fund / Asset Managers 77%, Banks 9%, Insurance / Pension Funds 12%, Private Banks 2%

Fund / Asset Managers 77%, Asset Managers 81%, Private Banks Banks 5%, Insurance / 2%, Banks 8%, Insurance Company Pension Funds 17%, Private 9% Banks 1%

Fund / Asset Managers 70%, Banks 28%, Others 2%

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Global Bonds Performance: Spread over 7Y Euro Midswap [bps] 300

250

200

150

100 Mexico 21 EuroBond (A3, BBB+)

50

Turkey 21 EuroBond (Baa3, BBB-) Brazil 21 EuroBond (Baa2, BBB) Indo 21 EuroBond (Baa3, BBB-)

0 3-Sep-14

8-Sep-14

13-Sep-14

18-Sep-14

23-Sep-14

28-Sep-14

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Chapter 7

Rating, Government Guarantee, Supreme Audit Agency Opinion (BPK), Conclusion

Kementerian Ministry Keuangan Finance Republik Indonesia Ministryofof Finance–––Republic Republicof ofIndonesia Indonesia

Credit Rating of Indonesia  Rating Improvement Determinants 

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



Political stability and law enforcement improvement



Prudential government debt management:  Decrease of debt to GDP ratio  Timeliness of debt obligations payment  Increasing investors / lenders confidence

 Sovereign Credit Rating (Fitch, Moody’s, S&P) 

Improvement rating one notch down the potential performance yield of new foreign currency of government securities approximately 75-115bps

 Country Risk Classification (CRC) 

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

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Indonesia Credit Rating Performance (1) Indonesia Rating Performance 1999 - 2013 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

S&P CCC+ BCCC CCC+ B B+ B+ BBBBBBBBBB BB+ BB+ BB+

Fitch BBBB B+ B+ BBBBBBBB BB BB+ BBBBBBBBB-

Rating Moody's R&I B3 BB3 BB3 BB3 BB2 BB2 BB2 BBB1 BBBa3 BB+ Ba3 BB+ Ba2 BB+ Ba2 BB+ Ba1 BB+ Baa3 BBBBaa3 BBB-

JCRA B B B+ B+ BBBBBBBB+ BBBBBBBBBBBB-

CRC 6 6 6 6 6 6 5 5 5 5 5 4 4 3 3

on May 2, 2013, S&P affirmations Indonesia's Sovereign Credit Rating at BB+ with a stable outlook on November 21, 2012, Fitch affirmations Indonesia's Sovereign Credit Rating at BBB- with a stable outlook on October 18, 2012, R&I upgraded Indonesia’s Sovereign Credit Rating from BB+ to BBBon March 30, 2012, OECD upgraded CRC of Indonesia from classification 4 to 3 on January 18, 2012, Moody's upgraded Indonesia's Credit Rating from Ba1 to Baa3 On July 13,2010, JCRA upgraded Indonesia’s Credit Rating from BB+ to BBB- which placed Indonesia into Investment Grade

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Krisis ekonomi 1998

Rekapitalisasi Perbankan

Reprofiling VR & HB, Asset-Bond Swap, & penerbitan SUN jk panjang

Lelang penerbitan SUN secara reguler, program Buyback

Lelang penerbitan SUN secara reguler, program Buyback, & Debt Swtiching

Lelang penerbitan SUN secara reguler, program Buyback, Debt Swtiching, & diversivikasi instrumen

BBB12

Baa1 Baa2 Baa3

BB+ 11 BB 10

Ba2

BB-9

Ba3

B+8

B1

Ba1

B7

B2

Moodys’s menaikan rating ke Ba1 per 17 Januari 2011

B-6 CCC+ 5 CCC4 CCC3 CC2 R/C1

B3

Moodys’s menaikan rating ke Baa3 per 18 Januari 2012

Caa1 Caa2

S&P’s menaikan rating ke BB+ per 8 April 2011

S&P sempat menurunkan rating ke Selective Default namun direvisi kembali 2 hari kemudian

Caa3 Ca

Fitch’s menaikan rating ke BBBper 15 Desember 2011

C

SD/DD -

1997 1999 2000 2001 2002 2003 2004 2005 2005 2006 2007 2008 2009 2010 2010 2011 2011 2012 2008 2009 2012 2013 2003 2004 1997 1998 1998 1999 2000 Fitch’s

S&P’s

Moody’s Kementerian Keuangan – Republik Indonesia Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Non Investment grade

Non Investment grade

14 BBB+ BBB 13

Investment grade

Investment grade

Indonesia Credit Rating Performance (2)

Indonesia Sovereign Credit Rating Performance (1)  On May 2, 2013, S&P affirmations Indonesia's Sovereign Credit Rating at BB+ with a stable outlook. Highlights from S&P are:  “Indonesia supported by decade of moderately strong growth, conservative fiscal policy, and modest public sector debt burden. Meanwhile, the weakening policy environment may ultimately have a negative impact on growth prospects and the generally sound economic conditions. In addition, the external sector is also experiencing vulnerability shown by the current account deficit and increasing private sector external debt.“

 On November 21, 2012, Fitch affirmations Indonesia's Sovereign Credit Rating at BBB- with a stable outlook. Highlights from Fitch are: 

“the relatively high economic growth that is resilient to the declining global condition, high investment rate, low andPublic Relation Group declining public debt ratios and the strong overall macroeconomic policy framework.“

 On October 18, 2012, R&I upgrades Sovereign Credit Rating of the Republic of Indonesia to BBB- /stable outlook. R & I stated key factors supporting the decision of upgrading the sovereign credit rating of Indonesia (1) Indonesian economic resilience in achieving high growth amid the global economic downturn (2) conservative fiscal management (3)

Government’s debt burden is kept low and (4 ) financial system has become more stable  On March 30 2012, OECD upgraded Indonesia's Country Risk Classification (CRC) from classification 4 to 3, along with Thailand, Uruguay, South Africa, Rusia, India, Brasil and Peru. Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Indonesia Sovereign Credit Rating Performance (2)  On January 18, 2012, Moody's Investors Services upgraded Indonesia's Sovereign Credit Rating from Ba1 to Baa3 with stable outlook. Highlights from Moody's are: 

“Some of the key drivers of the decision are Moody's anticipation that government financial metrics will remain in line with Baa peers, the demonstrated resilience of Indonesia's economic growth to large external shocks, the presence of policy buffers and tools that address financial vulnerabilities and a healthier banking system capable of withstanding stress“

 On July 13, 2010 JCRA upgraded Indonesia’s Credit Rating from BB+ to BBB-

which placed Indonesia into Investment Grade. Highlights from JCRA are: 

“JCRA explained that the upgrade reflects (i) enhanced political and social stability along with the progress in democratization and decentralization, (ii) sustainable economic growth outlook underpinned by solid domestic demand, (iii) alleviated public debt burden as a result of prudent fiscal management, (iv) reinforced resilience to external shocks stemming from the foreign reserves accumulation and an improved capacity for external debt management and (v) efforts made by the second Yudhoyono administration to outline the framework to deal with structural issues such as infrastructure development.”

Kementerian Ministry of Finance Keuangan – Republic – Republik of Indonesia

Government Guarantee Outstanding and Budget Allocation

No Government Guarantee Program

No of Guarantee Letter

Project Guaranteed Amount (Billion Rupiah)

Budget Allocation (Billion Rupiah) Outstanding 2008

2009

2010

2011

2012

2013

2014

283.0

1,000.0

1,000.0

889.0

623.3

611.2

913.7

1 Fast track Program Phase 1 (FTP 1)

34

83,487.9

58,602.9

2 Program Percepatan Penyediaan Air Minum (Clean Water Avaliability Program) 3 Penjaminan Proyek Kerjasama Pemerintah dan Swasta (Public Private Partnership Project)

5

205.2

154.3

-

-

50.0

15.0

10.0

35.0

2.2

1

38,300.8

-

-

-

-

-

-

59.8

48.2

4 Fast track Program Phase 2 (FTP 2)

5

41,935.8

-

-

-

-

-

-

45

163,929.7

283.0

1,000.0

1,050.0

904.0

633.3

TOTAL

58,757.2

-

706.0

964.1

Notes: - As of June 30, 2014 - Rate assumptions : Rp. 11.969,- per USD

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

BPK Opinion on Government Financial Report  Indonesian Supreme Audit Agency (BPK) has awarded

Unqualified Opinion to the Financial Report of all accounts related to debt management and administration (BA999.01)  Debt management’s accountability continues to improve  Internal

control system  Compliance to the existing regulation

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

Conclusion  Fiscal deficit requires financing. Debt has long been recognized as the best policy tool to support liquidity and to refinance matured debt  Debt outstanding accounts growth in nominal term but debt as a share of GDP 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 guarantee accountability and transparency of debt management  Central Government’s Financial Report of 2008, 2009, 2010, and 2011 has been awarded Unqualified Opinion (WTP) by the Supreme Audit Agency (BPK)  Global crisis has not changed investor expectation and market confidence to Indonesia. Rating upgrade especially since 2005, and on March 12th 2010 S&P upgraded Indonesia rating from BB- to BB in the midst of global financial crisis and rating downgrading of other economies. This proves at least two things: positive expectation of the economy in the short-to-medium run and the credibility of fiscal policy. By JCRA and Fitch, Indonesia has been placed into Investment Grade category 

Kementerian Ministry of Finance Keuangan – Republic –– Republik of Indonesia Ministry of Finance Republic of Indonesia

© 2014 Directorate of Evaluation, Accounting and Settlement Directorate General of Debt Management Ministry of Finance of The Republic of Indonesia Frans Seda Building, 7th Floor Jalan DR. Wahidin Raya No. 1 Jakarta Phone. +62-21-3864778; Fax. +62-21-3843712 www.djpu.kemenkeu.go.id CP: [email protected]/ [email protected]