In Committee IV of the DPR RI s working meeting with the Ministry of Finance, Bank Indonesia and Bappenas on the 2026 Draft State Budget (APBN), the burden-sharing scheme resurfaced not as an extraordinary measure like during the pandemic, but under a clearer and more prudent formula. BI reiterated that its government bond purchases have been carried out in the secondary market strictly for monetary policy purposes, not direct budget financing. The new burden-sharing formula lowers fiscal interest costs, creating space for priority spending, although the market perception of BI s independence remains a key factor in determining Indonesia s risk premium.
BI s Bond Purchases: Market-Based, Not Fiscal Financing. Bank Indonesia (BI) has purchased around Rp200tn of government bonds (gross), mostly through the secondary market, including debt-switching programs. The objective is expansionary monetary policy to lower interest rates, add liquidity, and stabilize the market. BI emphasized these operations are not direct APBN financing, but are fully conducted through market mechanisms.
Unlike the pandemic-era scheme, today s burden sharing is more measured and market-based, as all purchases are executed in the secondary market. During Covid, BI directly absorbed Rp836.6tn of Variable Rate (VR) bonds in the primary market under burden-sharing arrangements, including Rp397.6tn via SKB II in 2020 for public goods and Rp439tn under SKB III in 2021 22 for health and humanitarian spending. The maturities of these Covid-era bonds will begin in 2025 (Rp100tn) and peak in 2027 28 (over Rp210tn annually). For the 2025 burden-sharing scheme, there is still no official guidance on the required size.
New Burden-Sharing Formula: Market-Based and Transparent. BI and the Ministry of Finance have agreed on a new cost-sharing framework for selected programs such as subsidized public housing and the Merah Putih Village Cooperatives. The formula is straightforward: (10-year government bond yield government deposit rate in banks) 2. For example, if the 10-year bond yield is 6.3% and the government s deposit rate is 2%, then (6.3% 2%) 2 = 2.15%. This 2.15% represents the interest cost to be shared equally between BI and the Ministry of Finance, making the scheme more market-based, transparent, and fiscally efficient.
Cost-Sharing Applied to Priority Programs. Under the new burden-sharing formula, the housing program carries an effective cost of 2.9%, split equally between BI and the Ministry of Finance. For the Merah Putih Village Cooperatives, the effective cost is 2.15%. This arrangement lowers fiscal interest expenses, making priority programs more affordable to finance.
Policy Synergy (Asta Cita). Finance Minister Sri Mulyani emphasized that the new burden-sharing framework is part of Asta Cita, aimed at safeguarding macroeconomic stability while supporting grassroots economic programs. Bank Indonesia also reaffirmed its commitment to close coordination with the government to maintain stability and foster sustainable growth.
