January 2011 Edition. Table of Contents Chapter 1 Background, Debt Policy & Management and its...

January 2011 Edition

Table of Contents

Chapter 1

Background, Debt Policy & Management and its Objectives, Debt Instruments, Legal Basis

1. Background (1)

2. Background (2)

3. Debt Policy & Management and its Objectives

4. Debt Instruments (1)

5. Debt Instruments (2)

6. Debt Management: Legal Basis

Chapter 2

State Budget, Deficit and its Financing

7. State Budget, fiscal year 2010 & 2011

8. Fiscal deficit and State Budget Financing, 2000-2011

9. Global Deficit and Deficit in Various Countries, 2007-2010

10. Financing Development, 2008-2011

11. Debt Financing Development, 1998-2011

12. Realization of Government Securities, 2010

13. Program Loans, 2006-2010

14. Foreign Loans Financing 2001-2011

15. Project & Program Loans Drawing, 2006-2009

16. Project Loans Drawing, 2010

17. Project Loans Drawing, 2010 (chart)

Chapter 3

Debt Portfolio – Outstanding, Debt Maturity Profile, Government Securities Development and Foreign Loans

18. Government Debt Outstanding, 2001-2010

19. Trend of Government Debt Outstanding, 1998-2010

20. Debt Maturity Profile as of Dec 31th, 2010

21. Government Securities, December 2007 – Dec 31th, 2010

22. Foreign Loans by Creditor Types, 1998-2010

23. Foreign Loans by Creditor Types, 2001-2010

24. Foreign Loans by Sector, 2005-2010

25. Foreign Loans by Sector, 2005-2010 (chart)

26. Government Debt by Currency, 2001-2010

27. Government Debt by Currency, 2000-2010

28. Foreign Loans Drawing by Financing Type, 2006-2011

Table of Contents

Chapter 4

Debt Management’s Performance – Debt Performance Measurement and Comparison, Loan Disbursement, Government Debt Securities Re-profiling

29. Debt-to-GDP Ratio, 1999-2011

30. Debt-to-GDP Ratio – Countries Comparison, 1999-2010

31. Debt-to-GDP Ratio in Various Countries, 2008-2014

32. Maturity Profile of Tradable Government Securities, end of 2001 and Dec 31th, 2010

33. Debt Switching and Govt. Securities Buyback

34. Debt Swap to Reduce Debt

35. Restructurisation 2003

36. Restructurisation 2006

37. Restructurisation 2008: interest structure restructurisation SU-002 & SU-004

38. Foreign Loans Disbursement Performance, 1997 – Dec 31th, 2010

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

40. Debt Service to International Reserve Ratio, 1999-2010

41. Debt-to-GDP Ratio: Countries Comparison in 2008 and 2003-2010

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

43. Debt per capita in Various Countries, 2001-2010

44. Debt per capita: Countries Comparison in 2008 and 2003-2010

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

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

Chapter 5

Costs of Borrowing – Cost of Fund, Yield Curve, External Debt’s Costs

47. Interest to revenue and expense ratio, 2001-2011

48. Interest to Total Debt ratio, 2001-2011

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

Table of Contents

50. Interest Payment Realization 2002-2010

51. Program Loans: Cost Structure

52. Cost of Fund of Government Securities, Rupiah denominated

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

Chapter 6

Performance of Secondary Market for Govt. Securities – Trading Volume, Govt. Securities’ Ownership Structure

54. Average Daily Trading of Rp denominated Govt. Securities in Secondary, as of Dev 31 th 2010

55. Govt. Securities Ownership Structure by Bank and Non Bank, as of Dec 31 th 2010

56. Govt. Domestic Securities Ownership Structure by Investor Types

57. Govt. Domestic Securities Ownership share by Investor Types

58. Govt. Securities Ownership by foreign investor classified by maturity

59. Spread over 5 years US Treasury Bill

60. Spread over 10 years US Treasury Bill

61. Spread over Feb 38 US Treasury Bill

Chapter 7

Rating, Supreme Audit Agency Opinion, HIPICs and Conclusion

62. Indonesian Credit Rating

63. Indonesian Credit Rating Development (1)

64. Indonesian Credit Rating Development (2)

65. Indonesian Sovereign Rating – Performance Upgrading (1)

66. Indonesian Sovereign Rating – Performance Upgrading (2)

67. Supreme Audit Agency Opinion on Government’s Financial Report 2009

68. GDP per capita of HIPICs and Debt-relief Countries

69. Conclusion

Chapter 1Background, Debt Policy &

Management and its Objectives, Debt Instruments, Legal Basis

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. Poverty alleviation. Spur more growth in the eonomy. 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 our 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: 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; Upper limit of foreign loans can be received by an economy.

Background (2)

Debt Policy & Management and its Objectives

Objective

In the long run, debt policy and management are directed to minimize cost and maintain manageable level of risk.

Policy There is no such thing as conditionality imposed by donors; The Government only receives loans with long maturity & grace period and low cost; 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; Pursuing further deepening in domestic market by enlarging potential investor and

diversifying instrument; Help to spur efficiency in liquidity management by, for instance, issuance of money

market instrument. Gaining a larger access to international market (global bond, sukuk global, samurai bond) in

order to strengthen Government’s bargaining power in its role as a Borrower

Debt Instruments (1)

Government Loan consists of external and domestic debt: 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 and its disbursement is a function of the realization of stated policy matrix aiming 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. 2 Year 2006 on Loan/Grant Procurement

Procedure and Loan/Grant 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.

Government securities (SBN) in local and foreign currency denominated, tradable and non-tradable, fixed and variable: Government Debt Securities/Surat Utang Negara (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 re-structurization 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.

Debt Instruments (2)

Debt Management: Legal Basis

Laws and Regulations: Law Number 19/2008 on Government Islamic Securities Law Number 24/2002 on Government Securities Government Regulation No. 2 Year 2006 on Loan/Grant

Procurement Procedure and Loan/Grant Channeling Government Regulation No. 54 Year2008 on Domestic Loan

Procurement Procedure and Domestic Loan Channeling

Setting up, among other things, good governance principle: Foreign 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

Chapter 2State Budget, Deficit and

Its Financing

State Budget, Fiscal Year 2010 & 2011

[ Trillion IDR ]

APBN APBN-P Real Smt I % R-APBN APBN gap % prbhn.A. Total Revenue and Grants 949.7 992.4 443.7 44.7% 1,086.4 1,104.9 18.5 1.7%

I. Domestic Revenue 948.1 990.5 443.5 44.8% 1,082.6 1,101.2 18.5 1.7%1. Taxes 742.7 743.3 337.6 45.4% 839.5 850.3 10.7 1.3%2. Non Taxes 205.4 247.2 105.9 42.8% 243.1 250.9 7.8 3.2%

II. Grants 1.5 1.9 0.2 11.2% 3.7 3.7 - 0.0%#DIV/0! - #DIV/0!B. Expenditures 1,047.7 1,126.1 395.8 35.1% 1,202.0 1,229.6 27.5 2.3%

I. Central Govt. Expenditures 725.2 781.5 234.2 30.0% 823.6 836.6 13.0 1.6%1. Ministries/Agencies 340.1 366.2 104.5 28.5% 410.4 419.2 8.8 2.1%2. Non Ministries/Agencies 385.1 415.3 129.7 31.2% 413.2 417.4 4.2 1.0%ie:

a. Interest Payment 115.6 105.7 43.4 41.0% 116.4 115.2 (1.2) -1.0%- Domestic 77.4 71.9 30.3 42.1% 80.4 - External 38.2 33.8 13.1 38.8% 36.0

b. Subsidies 157.8 201.3 51.7 25.7% 184.8 187.6 2.8 1.5%II. Transfers to Regions 322.4 344.6 161.6 46.9% 378.4 393.0 14.6 3.8%#DIV/0! - #DIV/0!

C. Primary balance 17.6 (28.1) 91.3 -324.8% 0.7 (9.4) (10.2) -1401.3%#DIV/0! - #DIV/0!D. Surplus/ (Deficit) Budget (A-B) (98.0) (133.7) 47.9 -35.8% (115.7) (124.7) (9.0) 7.8%

% Deficit to GDP -1.6% -2.1% 1.6% -76.2% -1.7% -1.8% -0.1%#DIV/0! - #DIV/0!E. Financing 98.0 133.7 54.7 40.9% 115.7 124.7 9.0 7.8%

I. Debt 95.5 108.3 51.5 47.6% 123.5 127.0 3.6 2.9%II. Non Debt 2.5 25.4 3.1 12.3% (7.8) (2.4) 5.4 -69.4%

Financing Gap - - 102.6 - -

2010 2011

16

40

24

35

24

14 29

50

4

89

134

125

- -

(2)

(3)

7

23

36

57

86

99

10

8

12

7

10

10

7

1

(28)

(10)

(27) (2

4) (18) (16)

1 0

6

30

19

38

42

(1)

20

9

17

29

25

(2)

1.2

2.4

1.31.7

1.1

0.50.9

1.3

0.1

1.62.1

1.8

(2)

(1)

-

1

2

3

4

5

6

7

(40)

(20)

-

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010+ 2011++

[ % to GDP][ Trillion IDR ]

Deficit (Surplus) APBN SBN - net Loans - net Non Debt - net Deficit APBN, % to GDP (RHS)

Fiscal Deficit and State Budget Financing, 2000-2011

Source: MoF

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

Refinancing strategy to achieve a better debt profile explains the surge of government securities in 2005-2010

Notes:State Budget 2000-2009 used PAN/LKPP-Audited figures+ State Budget (Revision) 2010

Notes:State Budget 2000-2009 used PAN/LKPP-Audited figures+ State Budget (Revision) 2010

Global Deficit and Deficit in Various Countries, 2007-2010

Source : JPMorgan as of June 2009Source : JPMorgan as of June 2009

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.

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)

Emerging Market 0.5 (0.8) (3.9) (2.9) Latin America (0.2) - (2.7) 2.4 Brazil (2.2) (1.5) (2.7) (3.0) Mexico - - (2.5) (2.5)

Emerging Asia 0.8 (1.4) (3.7) (2.6) China 0.6 (0.4) (3.0) (2.0) Indonesia (1.3) (0.1) (1.6) (2.1)

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) Russia 5.4 4.1 (7.6) (5.0)

Notes:1. Nominal on % to GDP2. Specifically Indonesia, 2007 s.d. 2009 used LKPP figures, and 2010 used APBN-P figures

Financing Development, 2008-2011

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

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

[ Billion IDR]

2008 2009 2010*

Financing Need (115,579) (224,292) (297,695) Deficit (4,121) (88,619) (133,748)

Debt Repayment (103,768) (117,098) (124,677) SBN Repayment and Buyback (40,333) (49,067) (70,541) Debt Service (63,435) (68,031) (54,136)

Others (7,689) (18,575) (39,271) Domestic Bangking - - - Govt. Investement fund and Asset recovery (2,500) (12,395) (12,924) Contigency and Provisional fund - - (1,050) Natinal Education Development fund - - (1,000) Loan to PLN - - (7,500) Aid channeling (5,189) (6,181) (16,797)

Financing Source 195,529 248,257 297,695 Debt 176,468 207,200 249,818

Govt. securities, bruto 126,249 148,538 178,041 Pragman Loan 30,100 28,938 29,422 Project Loan 14,929 23,544 24,559 Aid Channeling 5,189 6,181 16,797 Domestic Loan - - 1,000

Non Debt 19,061 41,057 47,877 Privatization 82 - 1,200 Asset Management 2,820 - 1,200 Domestic Banking 16,159 41,057 45,477

Financing Gap 79,950 23,965 (0)

Govt. Securities Cash Flow, Netto 85,916 99,471 107,500

Foreign Loan Cash Flow, Netto (18,406) (15,550) (156)

Domestic Loan Cash Flow, Netto - - 1,000

Non Debt Cash Flow 11,372 37,392 25,403

R-APBN APBN gap % changes

Financing Need (276,085) (274,167) 1,917 -0.7%

Deficit (115,677) (124,657) (8,980) 7.8%

Debt Repayment (144,066) (133,542) 10,524 -7.3%SBN Repayment and Buyback (84,000) (74,000) 10,000 -11.9%Principal of foreign loans Repayment (48,076) (47,818) 258 -0.5%Aid Channeling (11,990) (11,725) 265 -2.2%

Non Debt Financing (16,342) (15,968) 374 -2.3%Domestic Banking - - - - Government Investation & BUMN Restructuritation (12,806) (13,932) (1,127) 8.8%National Education Development Fund (2,500) (1,000) 1,500 -60.0% Liability Insurance (1,036) (1,036) - -

Financing Source 276,085 274,167 (1,917) -0.7%

Debt 267,554 260,587 (6,967) -2.6%Govt. Securities issuence 209,484 200,654 (8,830) -4.2%Foreign Loans Drawing 57,070 58,933 1,863 3.3%Program Loan 17,685 19,813 2,128 12.0%

Reguler 10,230 12,358 2,128 20.8%Sector Program Loan 7,455 7,455 - -

Central Govt. Project Loan 27,396 27,396 - - Project Loan to Aid Channeling 11,990 11,725 (265) -2.2%

Domestic Loan Drawing 1,000 1,000 - -

Non Debt 8,530 13,580 5,050 59.2%Privatization 340 340 - - Asset Management 533 583 50 9.4%Domestic Banking 7,657 12,657 5,000 65.3%

Financing Gap 0 0 (0) -

Net Financing Cash Flow 115,677 124,657 8,980 7.8%Govt. Securities Cash Flow, Netto 125,484 126,654 1,170 0.9%

Foreign Loan Cash Flow, Netto (2,996) (609) 2,386 -79.7%

Domestic Loan Cash Flow, Netto 1,000 1,000 - -

Non Debt Cash Flow (7,811) (2,388) 5,424 -69.4%

2011[billion IDR]

Debt Financing Development, 1998-2011

Net additional foreign loan recorded as negative since 2004 Total debt financing was negative in 2003-2004 thanks to the

proceeds coming from asset recovery and SOE privatization

Notes:State Budget 2004-2009 PAN/LKPP - Audited*) State Budget (Revision) 2010 **) State Budget 2011

Notes:State Budget 2004-2009 PAN/LKPP - Audited*) State Budget (Revision) 2010 **) State Budget 2011

[ Trillion IDR ]

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

Govt. Securities (netto) 100.0 401.6 150.1 9.0 -1.9 -3.1 6.9 22.6 36.0 57.2 85.9 99.5 107.5 126.7Issuence, bruto 100.0 401.6 150.1 9.0 2.0 11.3 32.3 47.0 61.0 100.0 126.2 148.5 178.0 200.7

Domestic 100.0 401.6 150.1 9.0 2.0 11.3 23.4 22.5 42.6 86.4 86.9 101.7 136.6

Foreign Currency 0.0 0.0 0.0 0.0 0.0 0.0 9.0 24.5 18.5 13.6 39.3 46.8 41.4

Bond 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 -49.1 -70.5 -74.0

Loan (netto) 21.0 29.4 10.2 10.3 6.6 0.5 -28.1 -10.3 -26.6 -23.9 -18.4 -15.5 0.8 0.4Drawing, bruto 51.0 49.6 17.8 26.2 18.9 20.4 18.4 26.8 26.1 34.1 50.2 58.7 70.8 58.9

Program Loan 24.9 25.2 0.8 6.4 7.2 1.8 5.1 12.3 13.6 19.6 30.1 28.9 29.4 19.8

Project Loan 26.1 24.4 17.0 19.7 11.7 18.6 13.4 14.6 12.5 14.5 20.1 29.7 41.4 27.4

Project Loan to Aid Channeling - - - - - - - - - - - - - 11.7

Aid Channeling - - - - - - - - - - -5.2 -6.2 -16.8 -11.7

Principal repayment -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 -47.8Domestic Loan Drawing, bruto - - - - - - - - - - - - 1.0 1.0

Debt Financing, Total 121.0 431.0 160.3 19.2 4.7 -2.6 -21.2 12.3 9.4 33.3 67.5 83.9 108.3 127.0

Realization of Government Securities Issuance 2010 (as of Dec, 31th 2010)

Notes :- 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

*) The Government plans to reduce the release of SBN, Rp. 15 5 trillion. According to this plan, the actual issuance of SBN 98.38% of target

APBN-P Realization % realization

to APBN-PRedemption & Buy back 2010 67,540,415 63,383,543 93.85%

SBN Netto (APBN) 107,500,400 86,798,880 80.74%

Buyback 3,000,000 729,437 24.31%

Inssuance Need 2010 178,040,815 150,911,860 84.76% *)

Government Debt Securities/GDS 123,945,000 83.87%

Domestic GDS 105,395,000

- ON 68,100,000

- ZC -

- SPN 29,295,000

- ORI 8,000,000

International GDS 18,550,000

Government Islamic Securities 26,966,860 100.00%

IFR 6,150,000

SBSN Ritel 8,033,860

SDHI 12,783,000

SBSN Valas -

Program Loans, 2006-2010

[ Million USD ]2006 2007 2008 2009

APBN APBN-P1 WB 1. Development Policy Loan (DPL) 1 s.d 7 600 600 750 750 600 600

2. Infrastructure Development Policy Loan (IDPL) 1 s.d 4 400 250 200 200 3. BOS-KITA Refinancing 1 sd. 2 47 553 200 164 4. PNPM Refinancing 744 544 5. Climate Change 200

Sub Total WB 600 600 1,197 1,553 1,744 1,708 2 ADB 1. State Audit Reform Sector Development Program (STARSDP)

2. Development Policy Support Program (DPSP) 1 s.d 6 200 200 200 200 200 3. Local Government Finance Reform and Governance Reform4. Infrastructure Reform Sector Development Program (IRSDP) 1-3 400 280 200 5. Capital Market Development Cluster Program (CMDCP) 1 dan 2 300 300 6. Poverty Reduction and MDG Acceleration Program 400 7. Local Government Finance Reform 350 8. Countercyclical Support Facility (CSF) 500

Sub Total ADB 600 900 830 500 200 700 3 JBIC/ JICA 1. Development Policy Loan (cofinancing dengan World Bank) 1 s.d 7 100 100 200 100 200

2. Infrastructure Reform Sector Development Program 1 dan 2 100 100 3. Indonesia Disaster Recovery and Management 200 4. Climate Change Program Loan 1 s.d 3 300 300 300 300 5. Economic Stimulus and Budget Support Loan 100 6. Others

Sub Total JBIC/ JICA 100 400 500 600 300 500 4 France Climate Change Program Loan 1 s.d 3 200 300 200 300

Sub Total France - - 200 300 200 300 5 IDB Liquid Funds 200

Sub Total IDB 200 - - - - -

TOTAL 1,500 1,900 2,727 2,953 2,444 3,208

Notes :DPL VI consists of $ 100 million and DPL VII of USD 100 million

2010No Lender Program Name

Notes:*) State Budget (Revision) 2010

Foreign Loans Financing, 2001-2011

26.2 18.9 20.4 18.4

26.8 26.1 34.1

45.0 52.5 54.0

58.9

-15.9 -12.3-19.8

-46.5-37.1

-52.7-57.9

-63.4-68.0

-54.1-59.5

10.3 6.60.5

-28.1

-10.3

-26.6 -23.9-18.4 -15.5

-0.2 -0.6

-90

-70

-50

-30

-10

10

30

50

70

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011**

Foreign Loan Drawing, bruto Foreign Loan Principal Repayment Foreign Loan Financing (netto)

[ Tril

iun

Rupi

ah ]

[ Trillion IDR ]

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011**

Foreign Loan Drawing, bruto 26.15 18.89 20.36 18.43 26.84 26.11 34.07 45.01 52.48 53.98 58.93

Foreign Loan Principal Repayment (15.88) (12.26) (19.81) (46.49) (37.11) (52.68) (57.92) (63.44) (68.03) (54.14) (59.54)

Foreign Loan Financing LN (netto) 10.27 6.63 0.55 (28.06) (10.27) (26.57) (23.85) (18.42) (15.55) (0.16) (0.61)

Project & Program Loans Drawing, 2006-2010as of Dec 31th, 2010

[Trillion IDR]

Nominal % to APBN% to

APBN-P

13.53 19.90 30.28 28.57 24.44 29.51 29.05 118.9% 98.4%

ekuivalen on billion US$ 1.50 2.11 2.74 3.04 2.44 3.21 3.23

a. World Bank 5.50 5.66 12.91 14.65 17.44 16.63 15.34 88.0% 92.2%

b. A D B 5.51 8.47 9.17 5.06 2.00 6.44 6.39 319.7% 99.3%

c. JEPANG 0.90 3.77 4.87 6.07 3.00 3.68 4.59 153.0% 124.7%

d. PERANCIS - - 2.20 2.79 2.00 2.76 2.73 136.3% 98.8%

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

f. Lain-Lain - - - - - - - 0.0% 0.0%

12.54 14.46 14.93 23.54 24.52 24.56 20.50 83.6% 83.5%

ekuivalen on billion US$ 2.20 2.04 2.35 2.50 2.45 2.67 2.28

TOTAL 26.06 34.36 45.21 52.11 48.96 54.07 49.55 101.2% 91.6%

ekuivalen dlm miliar US$ 3.70 4.14 5.09 5.54 4.90 5.88 5.51

Notes :Nominal on Trillion IDR

2008

2010

APBN2009

Realization as of Dec 31th, 2010

APBN-P

2. Project Loan

INSTRUMENT 2006 2007

1. Program Loan

Notes :Preliminary figures used SAPSK 2010 source from Dit. SP DJA as of March 23, 2010

Project Loan Drawing, 2010as of Dec 31th

Million USD Billion IDR Million USD Billion IDR USD IDR

A D B 247.77 2,251.55 10.2% 9.3%

AUSTRALIA 33.44 310.75 1.4% 1.3%

GERMANY 29.07 265.60 1.2% 1.1%

I B R D 371.83 3,392.87 15.3% 14.0%

I D A 140.67 1,285.11 5.8% 5.3%

I D B 65.92 594.45 2.7% 2.4%

JAPAN 960.34 8,697.03 39.5% 35.8%

SPAIN 18.74 173.41 0.8% 0.7%

CHINA 92.31 835.67 3.8% 3.4%

FRANCE 33.93 310.49 1.4% 1.3%

KOREA 61.74 570.78 2.5% 2.3%

SINGAPORE 172.84 1,558.73 7.1% 6.4%

OTHERS 27.37 248.94 1.1% 1.0%

2,431.14 24,311.44 2,255.97 20,495.38 92.8% 84.3%

Budget 2010 * Realization as of Dec 31th, 2010 %CREDITOR COUNTRIES

Project Loan Drawing, 2010as of Dec 31th

[ Billion IDR ] [ % ]

9.3%

1.3% 1.1%

14.0%

5.3%2.4%

35.8%

0.7%3.4%

1.3% 2.3%

6.4%

1.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Drawing on Billion IDR % to Budget ( RHS )

Chapter 3Debt Portfolio – Outstanding,

Debt Maturity Profile, Government Securities

Development and Foreign Loans

Notes:+ very preliminary figure, as of Nov 30, 2010* Includes semi commercial** Some figures are semi commercial*** Includes commercial

Notes:+ very preliminary figure, as of Nov 30, 2010* Includes semi commercial** Some figures are semi commercial*** Includes commercial

Government Debt Outstanding, 2001-2010

2001 2002 2003 2004 2005 2006 2007 2008 2009

Nominal %

a. Loan (on billion US$) 58.90 63.74 68.91 68.59 63.09 62.02 62.25 66.69 65.02 68.10 36.5%

Bilateral *) 35.16 40.37 46.19 46.48 42.16 41.07 41.03 44.28 41.27 41.89 22.5%

Multilateral **) 20.68 20.61 19.98 19.48 18.78 18.84 19.05 20.34 21.53 23.13 12.4%

Comercial ***) 2.41 2.20 2.19 2.17 1.82 2.01 2.08 1.98 2.15 3.02 1.6%

Suppliers ***) 0.48 0.39 0.37 0.29 0.17 0.11 0.08 0.09 0.07 0.06 0.0%

Others ***) 0.17 0.17 0.17 0.17 0.17 - - - - - 0.0%

b. Govt. Securities (on billion US$) 63.52 73.30 76.64 71.29 70.51 82.34 85.26 82.78 104.20 118.39 63.5%

Foreign currency denominated - - - 1.00 3.50 5.50 7.00 11.20 15.23 18.02 9.7%

Domestic currency denominated 63.52 73.30 76.64 70.29 67.01 76.84 78.26 71.58 88.97 100.37 53.8%

Cental Government Debt, Total(on billion US$) 122.42 137.04 145.55 139.88 133.60 144.36 147.51 149.47 169.22 186.48 100.0%

Cental Government Debt, Total(ekuivalen on Trillion IDR)

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 1,676.68 100.0%

includes SBN domestic denominated(on trillion IDR)

660.65 655.31 648.75 653.03 658.67 693.12 737.13 783.86 836.31 902.43 53.8%

SBN foreign denominated (on tillion IDR)

- - - 9.29 34.41 49.61 65.93 122.64 143.15 161.97 9.7%

Loan foreign denominated (on trillion IDR)

612.52 569.84 583.30 637.18 620.22 559.43 586.36 730.25 611.20 612.28 36.5%

Exchange rate (IDR/US$1) 10,400 8,940 8,465 9,290 9,830 9,020 9,419 10,950 9,400 8,991

Des '10 +

Trend of Government Debt Outstanding, 1998-2010

Notes:+ very preliminary figure, as of Nov 30, 2010

Notes:+ very preliminary figure, as of Nov 30, 2010

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

In most of the cases, outstanding of foreign loan increases when there is domestic exchange rate depreciation

In most of the cases, outstanding of foreign loan increases when there is domestic exchange rate depreciation

[ %]

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

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%

100

502 652 661 655 649 662 693 743 803

906 979 1,064

453

438

583 613 570 583 637 620 559586

730 611612

-

200

400

600

800

1,000

1,200

1,400

1,600

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

Loan Govt. Securities

[ trillion IDR ]

Debt Maturity Profile as of 2010

Govt. obligation issued for bank recap (BI/SRBI-001)

0

6760 56 56 52

42 41 4755

68

23 25 21 1828

15 21 26

12

7

14 2034

0

4747 51 51

49

4439

3837

36

31 2521

1714

1210

9

7

6

55

4

3

2

1

1

1

1 1-

20

40

60

80

100

120

140

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40-

20

55

Loan Govt. Securities

[Trillion IDR]

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Loan 0% 41% 44% 48% 47% 48% 51% 49% 44% 40% 34% 57% 50% 49% 48%Govt. Securities 0% 59% 56% 52% 53% 52% 49% 51% 56% 60% 66% 43% 50% 51% 52%

Year 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040Loan 33% 65% 41% 30% 100% 18% 39% 100% 3% 100% 11% 100% 5% 2% 100% 100%Govt. Securities 67% 35% 59% 70% 0% 82% 61% 0% 97% 0% 89% 0% 95% 98% 0% 0%

Government Securities Outstanding, December 2007 – Nov 30th, 2010

Government Securities Dec '07 Jun '08 Dec '08 Jun-09 Dec-09 Jun-10 Nov-10 31-Dec-10

A. Tradable 543,680 623,548 648,335 705,068 724,898 777,865 804,860 803,191

1. Rupiah Denominated 477,747 520,228 525,695 553,227 581,748 621,226 642,814 641,215

a. Govt. Debt Securities (SUN) 477,747 520,228 520,995 542,971 570,215 596,741 617,097 615,498 1) Surat Perbendaharan Negara 4,169 5,250 10,012 24,812 24,700 28,595 29,795 29,795 2) Zero coupon bond 10,500 19,023 11,491 11,451 8,686 2,680 2,512 2,512 3) Fixed Rate bond+) 294,453 330,338 353,558 361,625 393,543 422,571 441,995 440,396 4) Variable Rate bond 168,625 165,617 145,934 145,083 143,286 142,895 142,795 142,795

b. Govt. Islamic Securities (SBSN) - - 4,700 10,256 11,533 24,485 25,717 25,717 1) Fixed Rate Islamic bond++) - - 4,700 10,256 11,533 24,485 25,717 25,717

2. Foreign Denominated 65,933 103,320 122,640 151,841 143,150 156,639 162,046 161,976

a. Govt. bond (milllion US$) 7,000 11,200 11,200 14,200 14,200 16,200 16,200 16,200

b. Govt. Islamic bond (million US$) - - - 650 650 650 650 650

c. Govt. bond (million JPY) - - - - 35,000 35,000 95,000 95,000

B. Non Tradable 259,404 258,208 258,160 256,410 254,561 258,124 261,965 261,215

a. Promissory note to central bank 259,404 258,208 258,160 253,724 251,875 250,196 249,182 248,432

b. T-Bill - - - - - - - -

c. Govt. Islamic securities/ SDHI - - - 2,686 2,686 7,928 12,783 12,783

GOVT. SECURITITES, TOTAL (A +B) 803,084 881,756 906,495 961,478 979,459 1,035,989 1,066,825 1,064,406

Notes:

- Nominal on Billion IDR

- +) Includes ORI

- ++) Includes Sukuk Ritel

- Exchange rate (IDR/US$1) 9,419 9,225 10,950 10,225 9,400 9,083 9,013 8,991 - Exchange rate (IDR/J PY1) 101.70 102.58 107.13 110.29

Foreign Loans by Creditor Types, 1998-2010

*)

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

[Billion USD]

Nmnl % Total

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 30.49 44.8%

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 11.15 16.4%

WORLD BANK 11.32 12.09 12.42 12.17 11.53 10.67 9.90 9.11 8.74 8.37 8.96 10.10 11.37 16.7%

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 15.04 22.1%

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 68.04

200831 Des - 2010

2002 2003 2004 2005 2006 2007 20092001Countries 1998 1999 2000

Foreign Loans by Creditor Types, 2000-2010

Notes:*) as of Dec 31th, 2010


Multilateral donor (WB and ABD) and Japan has been acting in providing soft loan with long maturity and low cost

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

21% 18% 15% 14% 14% 14% 13%13% 16% 17%

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

29% 29% 31% 31% 31% 31% 31% 26% 25% 22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

Others ADB World Bank Japan

Foreign Loans by Sector, 2005-2010

Notes :-As of December 31th, 2010-Economic Sector Grouping is based on the standard used by Bank Indonesia and Central Bureau of Statistics

Notes :-As of December 31th, 2010-Economic Sector Grouping is based on the standard used by Bank Indonesia and Central Bureau of Statistics

Source : MoF & BISource : MoF & BI

[ Million USD ]

2005 2006 2007 2008 2009 2010

Farm, Agriculture, Foresty and Fisheries 1,846 1,755 1,641 1,615 1,784 2,016

Mining and Quarrying 424 623 662 804 776 837

Processing industry 2,593 2,387 2,415 2,659 2,291 2,218

Electricity, Gas and Water supply 7,232 6,607 6,157 6,838 5,473 5,818

Construction 10,669 10,277 10,049 11,145 12,251 12,871

Trade, Hotel and Restaurant 1,158 1,036 955 960 821 777

Transportation and Communication 3,477 3,144 2,897 2,723 2,368 2,226

Financial, Leasing and Financial services 6,593 7,103 7,913 8,768 8,723 9,635

Services 13,274 13,509 13,730 15,252 15,463 16,772

Others sector 15,827 15,580 15,833 15,926 15,072 14,927

TOTAL 63,094 62,021 62,253 66,689 65,021 68,099

Notes : As of December 31th, 2010Notes : As of December 31th, 2010

Foreign Loans by Sector, 2005-2010 (chart)

Source : MoF & BISource : MoF & BI

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

2005 2006 2007 2008 2009 2010

Farm, Agriculture, Foresty and Fisheries Mining and Quarrying Processing industry Electricity, Gas and Water supply Construction

Trade, Hotel and Restaurant Transportation and Communication Financial, Leasing and Financial services Services Others sector

[ Million USD ]

Government Debt by Currency, 2001-2010

Notes:Nominal on billion*) Nominal IDR on Trilion Rupiah, **) Nominal on billion, ***) as of dec 31th ,2010

Notes:Nominal on billion*) Nominal IDR on Trilion Rupiah, **) Nominal on billion, ***) as of dec 31th ,2010

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

on Original Currencies

IDR*) 660.7 655.3 648.7 653.0 658.7 693.1 737.1 783.9 836.3 902.4

USD**) 28.0 27.9 24.4 24.2 26.4 27.5 28.4 32.8 37.1 40.5

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 2,689.8

EUR**) 8.0 8.2 8.4 8.0 8.1 7.8 7.2 6.7 6.0 5.4

Others

Ekuivalen on Billion US$

IDR 63.5 73.3 76.6 70.3 67.0 76.8 78.3 71.6 89.0 100.4

USD 28.0 27.9 24.4 24.2 26.4 27.5 28.4 32.8 37.1 40.5

JPY 21.0 24.0 30.3 30.5 27.0 25.8 25.9 31.2 29.4 33.0

EUR 7.1 8.6 10.5 10.9 9.6 10.2 10.5 9.5 8.6 7.1

Others 2.7 3.2 3.7 3.9 3.5 4.0 4.4 4.4 5.2 5.4

Total 122.4 137.0 145.5 139.9 133.6 144.4 147.5 149.5 169.2 186.4

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 8,991.00

Exchange rate JPY/US$1 131.00 118.75 107.11 102.74 117.83 119.01 113.39 90.33 92.42 81.53

Exchange rate EUR/US$1 1.12 0.95 0.79 0.73 0.84 0.76 0.68 0.71 0.70 0.75

-------------------------- Multiple Currencies --------------------------

53% 52% 53% 53% 50% 50% 53% 53%48% 53% 55%

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

19% 19%22%

22% 21%

18% 17% 18%21% 22% 20% 18% 18% 21%

17% 17%

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

Others EUR JPY USD IDR



Government Debt by Currency, 2000-2010

On average, the proportion of debt in the amount between 2000 to 2010 more than 50%, although in 2008 decreased slightly due to exchange rate depreciation due to the global financial crisis

Foreign Loans Drawing by Financing Type, 2006-2011

Notes :*) LKPP/PAN Realization figures **) APBN-P 2010 figures

Notes :*) LKPP/PAN Realization figures **) APBN-P 2010 figures

[ Trillion IDR] [ % ]

13.5

3

19.9

0

30.2

8

28.5

7

29.4

2

19.8

1

12.5

4

14.4

6

14.9

3 23.5

4

24.5

6 39.1

2

0%

10%

20%

30%

40%

50%

60%

70%

80%

-

5

10

15

20

25

30

35

40

2006* 2007* 2008* 2009* 2010** 2011**

PROGRAM LOAN PROJECT LOAN % PROGRAM LOAN (RHS) % PROJECT LOAN (RHS)[Trillion IDR]

Loans Instrument 2006* % 2007* % 2008* % 2009* % 2010** % 2011*** %

PROGRAM LOAN 13.53 52% 19.90 58% 30.28 67% 28.57 55% 29.42 55% 19.81 34%

PROJECT LOAN 12.54 48% 14.46 42% 14.93 33% 23.54 45% 24.56 45% 39.12 66%

TOTAL 26.06 34.36 45.21 52.11 53.98 58.93

Chapter 4Debt Management’s Performance – Debt

Performance Measurement and Comparison, Loan Disbursement,

Government Debt Securities Re-profiling

85%89%

77%

67%61%

57%

47%

39%35% 33%

28% 27% 26%

0%

20%

40%

60%

80%

100%

120%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

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

[ % ][ trillion IDR ]

Debt Outstanding GDP Debt ratio to GDP (RHS)

Debt to GDP Ratio, 1998-2010

Source : MoF & BI, reprocessed

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

Notes:PAN/LKPP – Audited Realization figures*) very preliminary, used APBN-P 2010 assumption.

Debt Service Ratio = Interest + Amortization

Notes:PAN/LKPP – Audited Realization figures*) very preliminary, used APBN-P 2010 assumption.

Debt Service Ratio = Interest + Amortization

[ Trillion IDR ]

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

438 583 613 570 583 637 620 559 586 730 611 612 612 502 652 661 655 649 662 693 743 803 906 979 1,087 1,214 940 1,234 1,273 1,225 1,232 1,300 1,313 1,302 1,389 1,637 1,591 1,699 1,826

LOANGovt. SecuritiesTotal

54.9

198.8

25.5

62.2

50.7

121.3

82.8

60.3

20

60

100

140

180

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

Argentina Jepang Indonesia Filipina Turki Italia Inggris Amerika Serikat

Debt to GDP Ratio – Countries Comparison, 1999-2010

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 advanced countries such as US, UK, Japan and Italy.

Source: Economist Intelligence Unit

Debt to GDP Ratio in Various Countries, 2008-2014

Source : International Monetary Fund, “The State of Public Finances; Outlook and Medium-Term Policies After the 2008 Crisis”

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

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

2008f 2009f 2010f 2014f

Brazil 65.4 64.7 62.9 54.1

Germany 68.7 76.1 80.1 77.2

India 80.6 82.7 82.9 71.6

J apan 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

[Trillion IDR]

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

Notes:Government Securities/SBN consist of Government Debt Securities/SUN (2001 & 2009), and Government Islamic Securities/Sukuk (2009)

Notes:Government Securities/SBN consist of Government Debt Securities/SUN (2001 & 2009), and Government Islamic Securities/Sukuk (2009)

Since 2002, the GoI has conducted reprofiling strategy to improve government debt securities’s maturity profile, hence reducing refinancing risk

-

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

35

20

37

20

38

as of 31 Dec, 2010 End of 2001

Debt Switching and Buyback

Buyback : startegy to stabilize market and reduce debt outstanding

Debt Switching : strategy to reduce refinancing risk

YearAuction

FrequencySeries to be

SwitchedTenor of Series to be

SwitchedOffered Tenor

Volume of Bid Received

(billion IDR)

Volume of Bid Accepted

(billion IDR)

2005 1 x 9 series < 1 year s.d. 4 years 15 years 7,721 5,673

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




as of 31 Dec, 2010 6 x 11 s.d. 28 series < 1 year s.d. 8 years 10 s.d. 21 years 8,349 3,920

Total 117,081 64,063

YearAuction

FrequencySeries to be

BuybackTenor of Series to be

Buyback

Volume of Bid Accepted

(billion IDR)

2003 2 x 4 s.d. 7 series 1 year s.d. 3 years 8,127

2004 1 x 5 series 3 years s.d. 5 years 1,962

2005 4 x 2 s.d. 8 series < 1 year s.d. 4 years 5,158

2007 2 x 11 s.d. 13 series <1 year s.d. 5 years 2,859

2008 3 x 4 s.d. 8 series < 1 year s.d. 19 years 2,375

2009 1 x 4 series < 1 year 8,528

as of 31 Dec, 2010 13 x 1 s.d. 11 series < 1 year s.d. 17 years 3,201

Total 32,210

Debt Swap to Reduce Debt

Debt swap agreement with several donors has successfully reduced debt outstanding in the amount of EUR 149.3 million and realization in the amount of EUR 82.7 million, USD 46.2 million and realization in the amount of USD 18.8 million, AUD 75 million and realization in the amount AUD 0

Title1 2 3

Debt Swap I Elementary Education EUR 12.8 EUR 25.6 EUR 25.6

Debt Swap II Junior Secondary Education EUR 11.5 EUR 23.0 EUR 0.0

Debt Swap IIIa Financial Assistance for Environmental Investements for Micro and Small Enterprises Project

EUR 6.3 EUR 12.5 EUR 3.2

Debt Swap IIIb Strengthening the Development of National Parks in Fragile Ecosystems

EUR 6.3 EUR 12.5 EUR 0.0

Debt Swap IV School Reconstruction and Rehabilitation in Earthquake Area in Yogyakarta and Central Java

EUR 10.0 EUR 20.0 EUR 20.0

Debt Swap V Global Fund to Fight AIDS, Tubercolosis and Malaria (GFATM)

EUR 25.0 EUR 50.0 EUR 30.0

EUR 5.7 EUR 5.7 EUR 3.9

USD 24.2 USD 24.2 USD 16.7

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

Australia Debt Swap Debt2Health AUD 37.5 AUD 75.0 AUD 0.0

EUR 77.5 EUR 149.3 EUR 82.7

USD 44.2 USD 46.2 USD 18.8

AUD 37.5 AUD 75.0 AUD 0.0

Country Debt SwapProject Cancelation

Amount Commitment Realization

TOTAL

4 5 6

Germany

Italy Debt Swap I Housing and Setlement

Agreement between the Government and Bank Indonesia on August 1, 2003 on the settlement of liquidity support to banking industry (BLBI) and financial relationship 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 Rp 144.536.094.294.530 starting 1st August 2003.

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

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

If it is lower than 3%, the Government shall pay a charge until BI’s monetary liabilities filled up to that 3% figure.

Interest Rate of SRBI-01/MK/2003: 0,1% per annual (fixed, semi annual)

Restructuring 2003

SU-002/MK/1998: Date of issuance: October 23, 1998; Nominal: Rp20.000.000.000.000,- Principal is indexed to inflation, on a yearly basis. After indexation, of 3% interest payment as made

on semi-annual basis calculated from principal. Principal amortization is in semi-annual basis

starting from 1st October 2003 to 1 April 2018.

SU-004/MK/1999: Date of issuance : May 28, 1999; Nominal: Rp53.779.500.000.000,- Principal is indexed to inflation, on a yearly basis. After indexation, of 3% interest payment as made

on semi-annual basis calculated from principal. Principal amortization is in semi-annual basis

starting from 1st June 2003 to 1st December 2018.

Interest arrear and indexation SU-002 & SU-004 IDR54.862.150.308.421: Interest arrear: Rp16.929.470.080.766 Indexed to inflation: Rp37.932.680.227.655

Restructuring 2006

Pre-restructuring

SU-002/MK/1998: Nominal: Rp20.000.000.000.000,- 1% interest will be repaid in semi-annual

basis. Principal was amortized semi-annually,

starting from 1st April 2025 (no indexation to inflation applies).

SU-004/MK/1999: Nominal: Rp53.779.500.000.000,- 3% interest will be repaid in semi-annual

basis. Principal was amortized semi-annually,

starting from 1st December 2025 (no indexation to inflation applied).

SU-007/MK/2007 Nominal: 54.862.150.308.421 Non tradable, 0.1% interest per annum Principal was installed exponentially by a

cash or tradable SUN until 2025.

Post-restructuring

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 be restructured in 2009 with interest rate applied was 0.1% or with benchmark and terms condition of SRBI-01.

Ministry of Finance and BI agreed that interest rate of both SU-002 and SU-004 will be reduced to 0.1% from 1% and 3% respectively, starting on 1st January 2009 .

Restructuring 2008: Restructuring for Interest Rate

of SU-002 & SU-004

•Amortization of SU-007 was conducted since 2007•Amortization of SU-002 and SU-004 will be conducted in 2010

SU and SRBI Positionas of Dec 31th, 2010

Series Issued Maturity Nominal

SU-002/MK/1998 03-Oct-98 2010 - 2025 19,420,583,064,850.00

SU-004/MK/1999 28-May-99 2010 - 2025 52,315,360,704,352.00

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 49,998,285,712,461.00

248,432,177,309,092.00 TOTAL

Undisbursed loans has lessened showing efficiency improvement of the use of the proceeds of foreign loan 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

Foreign Loans Disbursement Performance, 1998 – Dec31th, 2010

Net commitment = the agreed loan amount; disbursement = disbursed of loan.

34.6%29.8%

25.2% 21.4%17.1% 13.9%

6.2% 6.0% 5.4% 5.3% 5.8% 5.3% 5.2%

0%

20%

40%

60%

80%

100%

0

50

100

150

200

Net Commitment Disbursement Undisbursed % Undisbursed (RHS)

[Billion USD]

[Billion USD]

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

Net Commitment 171.8 178.4 166.4 157.3 166.2 178.4 172.2 164.5 170.7 181.7 201.1 205.5 219.4

Disbursement 112.3 125.3 124.5 123.6 137.7 153.5 161.6 154.6 161.4 172.1 189.6 194.7 208.0

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 11.4

External Debt Service: Countries Comparison in 2008

and 2003-2008

0 5 10 15 20 25 30

Malaysia

Thailand

South Africa

Poland

Chile

Indonesia

India

Philippines

Colombia

Brazil

Turkey

External Debt Service, 2008(In percent of exports)

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

Brazil

Colombia

Indonesia

Thailand

Chile

Turkey

Poland

Malaysia

South Africa

Philippines

India

External Debt Service, changes 2003-08(in percent of exports)

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

Sumber: IMF

Since 2004, debt service to international reserve ratio has been continuing to decrease. This concern with liquidity improvement and ability to endure (external) shock

Since 2004, debt service to international reserve ratio has been continuing to decrease. This concern with liquidity improvement and ability to endure (external) shock

Debt Service to International Reserve Ratio, 1999-2010

Notes:* Preliminary ** Very preliminary

Notes:* Preliminary ** Very preliminary

21.6%

11.5%

15.2%13.8% 13.4%

21.7%

18.1%

20.6%

18.0%16.8%

17.9%

12.3%

0%

5%

10%

15%

20%

25%

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

Debt-to-GDP Ratio: Countries Comparison in 2008 and 2003-2010

Again, Indonesia is one of the top performers in reducing the level of debt to GDP ratio both in the group developing and developed economiesPublic Debt, 2010

(in percent of GDP)Public Debt, changes 2003-2010

(in percent of GDP)

0 100 200

Afrika SelatanAmerika Serikat

AustraliaBrasilChile

FilipinaIndia

IndonesiaInggrisJepang

KolombiaMalaysiaPolandiaThailand

Turki

-30 -10 10 30 50



FilipinaIndia

IndonesiaInggrisJepang


Turki

Source: IMF

Figure 1. External and Public Debt

10 20 30 40 50 60

Brazil

India

Colombia

Thailand

Malaysia

South Africa

Indonesia

Philippines

Turkey

Chile

Poland

External Debt, 2008(In percent of GDP)

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

Philippines

Indonesia

Brazil

Colombia

Malaysia

Chile

Thailand

Turkey

India

Poland

South Africa

External Debt, changes 2003-08(In percent of GDP)

0 5 10 15 20 25 30

Malaysia

Thailand

South Africa

Poland

Chile

Indonesia

India

Philippines

Colombia

Brazil

Turkey

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

Brazil

Colombia

Indonesia

Thailand

Chile

Turkey

Poland

Malaysia

South Africa

Philippines

India

External Debt to GDP Ratio in 2008 and 2003-2008

A moderate and manageable level of external debt to GDP ratio is also another significant achievement resulted from an effective debt management and policy

Source: IMF

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

Brazil, a rating-investment-grade country, shows a higher debt per capita than Indonesia which is in fact a non-investment-grade country


Debt per Capita in Various Countries, 2001-2010

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Brazil Indonesia Filipina Turki Cina India Italia [RHS]

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

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

Public Debt per Capita, 2010(in US$)

Public Debt per Capita, changes 2003-2010

(in US$)

0 10000 20000 30000



FilipinaIndia

IndonesiaInggris


Turki

0 5000 10000 15000



FilipinaIndia

IndonesiaInggris


Turki

Source: IMF

Debt to Revenue Ratio: Countries Comparison in 2008 and 2003-2008

10 110 210 310 410 510 610

ChileAustralia

South AfricaColombia

PolandUK

ThailandBrazil

IndonesiaMalaysia

TurkeyUS

PhilippinesIndia

Japan

Public Debt, 2008(In percent of revenues)

-190 -140 -90 -40 10 60

IndonesiaPhilippine

TurkeyIndia

ColombiaSouthChileBrazil

ThailandMalaysiaAustralia

PolandUS

UK Japan

Public Debt, changes 2003-08(In percent of revenues)

0 10000 20000 30000 40000

ChileIndonesia

IndiaPhilippines

ThailandColombia

South AfricaMalaysia Australia

TurkeyBrazil

Poland UKUS

Public Debt per Capita, 2008(In US$)

-500 4500 9500

ChileIndonesia

PhilippinesSouth Africa

ThailandIndia

AustraliaColombia

TurkeyMalaysia

BrazilPoland

USUK

Public Debt per Capita, changes 2003-08(in US$)

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

Source: IMF

Interest Payment to GDP Ratio in Various Countries, 1998-2007

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


0

2

4

6

8

10

12

14

16

18

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Japan Indonesia Philippines Turkey Italy United Kingdom United States

Chapter 5 Costs of Borrowing – Cost of Fund, Yield

Curve, External Debt’s Costs

29.0

%

29.4

%

19.2

%

15.5

%

13.2

%

12.4

%

11.3

%

9.0

%

11.0

%

10.6

%

10.4

%

25.5

%

27.2

%

17.4

%

14.6

%

12.8

%

11.9

%

10.5

%

9.0

%

10.0

%

9.4

%

9.4

%

0%

5%

10%

15%

20%

25%

30%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011**

as a share of revenue as a share of expense

Interest To Revenue and Expense Ratio, 2000-2010

Cost of fund is continuing to be more efficient

Notes:Realization figures 2000-2008 based on APBN 2000-2008 PAN/LKPP-Audited * projection figures based on APBN (revision) 2010

[Billion IDR]

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011**Revenue 300,600 298,527 340,928 403,105 493,919 636,153 706,108 981,609 848,763 992,399 1,104,902 Expense 341,563 322,180 376,505 427,177 509,633 667,129 757,650 985,731 937,398 1,126,147 1,229,558 Debt Service Payment 87,142 87,667 65,351 62,486 65,200 79,083 79,806 88,430 93,782 105,650 115,209

Interest to Total Debt 2001-2011

Notes:Realization figures 2000-2008 based on APBN 2000-2008 PAN/LKPP-Audited * projection figures based on APBN (revision) 2010** projection figures based on APBN 2011

Notes:Realization figures 2000-2008 based on APBN 2000-2008 PAN/LKPP-Audited * projection figures based on APBN (revision) 2010** projection figures based on APBN 2011

6.8% 7.2%

5.3% 4.8% 5.0%6.1%

5.7% 5.4% 5.9% 6.2% 6.3%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2001 2001 2003 2004 2005 2006 2007 2008 2009 2010* 2011**

Total Debt Interest Debt Payment Ratio (RHS)

[ Trillion IDR ] [ % ]

[Trillion IDR]

2001 2001 2003 2004 2005 2006 2007 2008 2009 2010* 2011**

Total Debt 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 1,699.00 1,826.04

Interest Debt Payment 87.14 87.67 65.35 62.49 65.20 79.08 79.81 88.34 93.78 105.65 115.21

Interest Payment To Revenue Ratio In Selected Countries,

In 2008 and 2003-2008

-500 4500 9500

ChileIndonesia

PhilippinesSouth Africa

ThailandIndia

AustraliaColombia

TurkeyMalaysia

BrazilPoland

USUK

0 10 20 30

TurkeyIndia

PhilippinesBrazil

ColombiaUS

Indonesia South Africa

JapanMalaysia

UKPoland

ChileAustralia

Public Debt Interest Payment, 2008(In percent of revenues)

-35 -25 -15 -5 5

TurkeyPhilippinesIndonesia

IndiaBrazil

South Africa Chile

Malaysia Colombia

PolandJapan

AustraliaUSUK

Public Debt Interest Payment, changes 2003-08(In percent of revenues)

Source: IMF

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

Interest Payment Realization 2002-2010

Notes: *) figures based on APBN (revision) 2010Notes: *) figures based on APBN (revision) 2010

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

71% 71% 63% 65% 69% 68% 68% 68% 68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 *

Interest payment of External Loan Interest payment of Domestic Loan

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 93.78 100.00 105.65 100.00

a. Interest payment of Domestic Loan

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 63.76 67.98 71.9 68.01

b. Interest payment of External Loan

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 30.03 32.02 33.8 31.99

20062005[ trillion IDR ]

Loan Interest Payment

200420032002 2010*200920082007

Program Loans: Cost Structure

Notes:As of Nov 30, 2010* 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

Tenor Interest Fee*Asian Development Bank1. Development Policy Support Program (DPSP) 5 15.0 LIBOR + 0.2% 0.15%2. Capital Market Development Cluster 15.0 LIBOR + 0.2% 0.15%

World Bank1. Development Policy 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/J ICA)1. Climate Change Program 15.0 0.15% -2. Economic Stimulus and Budget Support Loan 15.0 J PY LIBOR -3. Infrastructure Reform Sector Development 15.0 0.70% -4. Development Program Loan 5 15.0 0.70% -

France1. Climate Change Program 15.0 EURIBOR - 0.3% -

Creditor/ ProgramTrem & Condition

4.00

6.00

8.00

10.00

12.00

1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y10Y 15Y 20Y 30Y

31 Dec '10 Dec '09 J un '09

[in percentage]

Yield Curve of Domestic Government Securities

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

[Procentage]

Tenor 31-Dec-10 Dec '09 Jun '09

1Y 5.36 6.72 7.66

2Y 5.82 7.61 8.36

3Y 6.27 8.23 9.08

4Y 6.34 8.75 9.50

5Y 6.78 8.80 9.81

6Y 6.96 9.06 10.10

7Y 7.16 9.24 10.31

10Y 7.57 10.04 11.05

15Y 8.78 10.64 11.96

20Y 9.24 10.72 12.18

30Y 9.68 10.97 12.30

9.2189.617

9.949.538

4.2994.486

4.9765.1865.3285.401

6.842

2.703

3.284

3.7074.016

4.2224.5254.595

6.098

10.58

0

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

31-Dec-08

31-Dec-09

31-Dec-10

Yield Curve of Indonesian Global Bond

[Procentage]

Chapter 6Performance of Secondary Market for

Govt. Securities – Trading Volume, Govt. Securities’ Ownership Structure

0

50

100

150

200

250

300

350

400

450

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

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

2004 2005 2006 2007 2008 2009 2010

[ Frequency][ Trillion IDR]

Volume Average Daily Volume per Year Frequency - RHS

Average Daily Trading of Domestic Govt. Securities,

as of Dec 31, 2010

Until 2007, the increasing trend of average daily trading showed a better market liquidity. Global financial crisis in 2008 has significantly reduced trading activities. However, the average volume remains higher than 2005’s figure when the crisis hit.

Until 2007, the increasing trend of average daily trading showed a better market liquidity. Global financial crisis in 2008 has significantly reduced trading activities. However, the average volume remains higher than 2005’s figure when the crisis hit.

-

5%

10%

15%

20%

25%

30%

0

100

200

300

400

500

600

700

Au

g'0

4

Oc

t'0

4

De

c'0

4

Fe

b'0

5

Ap

r'0

5

Ju

n'0

5

Au

g'0

5

Oc

t'0

5

De

c'0

5

Fe

b'0

6

Ap

r'0

6

Ju

n'0

6

Au

g'0

6

Oc

t'0

6

De

c'0

6

Fe

b'0

7

Ap

r'0

7

Ju

n'0

7

Au

g'0

7

Oc

t '0

7

De

c '0

7

Fe

b '0

8

Ap

r'0

8

Ju

n'0

8

Au

g'0

8

Oc

t'0

8

De

c'0

8

Fe

b'0

9

Ap

r'0

9

Ju

n'0

9

Au

g'0

9

Oc

t'0

9

De

c'0

9

Fe

b'1

0

Ap

r'1

0

Ju

n'1

0

Au

g'1

0

Oc

t'1

0

De

c'1

0

Trillion IDR

BANK NON-BANK % foreign to Total - RHS

Government Securities Ownership - Bank and Non Bank,

as of Dec 31, 2010

Notes:Non-Bank including Government institution

Notes:Non-Bank including Government institution

The more diversified investor is demonstrated by the shrinkage of bank ownership and the augmentation of non-bank, foreign and retail investor

Increasing offshore ownership is a sign of better market confidence

Domestic Government Securities Ownership (absolute)

Notes:• Nominal in trillion IDR• Included SBSN ownership• Foreign holders include banks, financial institution, etc;• Others include individuals, corporates, foundations, etc.*) Include SUN repo transaction to BI, since February 8, 2008

Dec '07 Dec'08 Dec'09 Mar'10 Jun'10 Aug'10 Sep'10 Oct'10 Nov'10 31-Dec-10

BANK 268.65 258.75 254.36 237.74 232.67 230.92 233.96 225.19 228.04 217.27

State Own Bank recap 154.67 144.72 144.19 141.03 137.79 136.84 137.55 135.32 134.30 Private Bank recap 72.63 61.67 59.98 54.32 55.07 55.00 56.23 52.70 56.11 Non Bank recap 35.37 45.17 42.40 36.78 35.46 34.09 35.10 32.70 33.36 BPD Recap 5.97 6.50 6.02 3.62 1.68 1.84 1.90 1.58 1.48 Syariah Bank 0.69 1.77 1.99 2.68 3.17 3.18 2.89 2.79 2.95

Government Institutions

14.86 23.01 22.50 18.71 19.12 19.11 14.61 15.43 12.89 17.42

Bank Indonesia * 14.86 23.01 22.50 18.71 19.12 19.11 14.61 15.43 12.89 17.42

NON-BANK 194.24 243.93 304.89 336.71 369.43 395.32 396.51 402.37 401.89 406.53

Mutual fund 26.33 33.11 45.22 44.18 48.84 52.27 51.56 51.91 52.27 51.16 Insurance 43.47 55.83 72.58 78.04 77.44 80.61 79.94 77.78 77.74 79.30 Foreign 78.16 87.61 108.00 132.46 162.05 177.99 182.26 191.99 191.20 195.76 Pension fund 25.50 32.98 37.50 37.24 36.48 37.10 36.57 36.29 36.53 36.75 Securities 0.28 0.53 0.46 0.42 0.13 0.30 0.20 0.14 0.15 0.13 Others 20.50 33.87 41.12 44.37 44.49 47.05 45.98 44.25 44.00 43.43

TOTAL 477.75 525.69 581.75 593.16 621.23 645.36 645.08 642.98 642.81 641.21

Domestic Government Securities Ownership (%)

Notes:Nominal in trillion IDRIncluded SBSN ownershipForeign holders include banks, financial institution, etc;Others include individuals, corporates, foundations, etc.*) Include SUN repo transaction to BI, since February 8, 2008

Dec '07 Dec'08 Dec'09 Mar'10 Jun'10 Aug'10 Sep'10 Oct'10 Nov'10 31-Dec-10

BANK 56.23% 49.22% 43.72% 40.08% 37.45% 35.78% 36.27% 35.02% 35.47% 33.88%

State Own Bank recap 32.38% 27.53% 24.79% 23.78% 22.18% 21.20% 21.32% 21.05% 20.89%

Private Bank recap 15.20% 11.73% 10.31% 9.16% 8.86% 8.52% 8.72% 8.20% 8.73%

Non Bank recap 7.40% 8.59% 7.29% 6.20% 5.71% 5.28% 5.44% 5.08% 5.19%

BPD Recap 1.25% 1.24% 1.03% 0.61% 0.27% 0.28% 0.29% 0.25% 0.23%

Syariah Bank 0.13% 0.30% 0.34% 0.43% 0.49% 0.49% 0.45% 0.43% 0.46%

Government Institutions

3.11% 4.38% 3.87% 3.15% 3.08% 2.96% 2.26% 2.40% 2.00% 2.72%

Bank Indonesia* 3.11% 4.38% 3.87% 3.15% 3.08% 2.96% 2.26% 2.40% 2.00% 2.72%

NON-BANK 40.66% 46.40% 52.41% 56.77% 59.47% 61.26% 61.47% 62.58% 62.52% 63.40%

Mutual fund 5.51% 6.30% 7.77% 7.45% 7.86% 8.10% 7.99% 8.07% 8.13% 7.98%

Insurance 9.10% 10.62% 12.48% 13.16% 12.47% 12.49% 12.39% 12.10% 12.09% 12.37%

Foreign 16.36% 16.66% 18.56% 22.33% 26.09% 27.58% 28.25% 29.86% 29.74% 30.53%

Pension fund 5.34% 6.27% 6.45% 6.28% 5.87% 5.75% 5.67% 5.64% 5.68% 5.73%

Securities 0.06% 0.10% 0.08% 0.07% 0.02% 0.05% 0.03% 0.02% 0.02% 0.02%

Others 4.29% 6.44% 7.07% 7.48% 7.16% 7.29% 7.13% 6.88% 6.84% 6.77%

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

0

40,000

80,000

120,000

160,000

200,000

[Rp miliar]

Total 78,156 87,606 107,997 132,459 148,511 144,089 162,055 172,221 177,991 182,265 191,991 191,199 195,755

>5 52,294 61,055 76,702 98,355 112,448 110,991 116,675 118,854 122,199 125,956 128,489 128,257 131,232

>2-5 17,243 20,374 21,361 21,660 23,135 20,953 28,632 31,737 32,503 33,274 38,375 38,143 35,511

>1-2 4,374 4,491 5,119 8,017 7,135 6,621 6,742 8,345 8,689 5,462 4,623 5,811 9,077

0-1 4,246 1,687 4,816 4,427 5,793 5,524 10,006 13,284 14,601 17,573 20,505 18,988 19,935

Dec-07 Dec-08 Dec-09 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 31-Dec-10

Offshore’s Ownership of Domestic Government Securities,

Classified by Tenor

Mayoritas investor asing merupakan ‘long-term investors’, dimana kepemilikan mereka atas SBN bertenor panjang (lebih dari 5 th) mencapai 67,04% per 31 Desember 2010.

67,08%

3,04%

9,93%

67,04%

4,64%

10,18%

19,95% 18,14%

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

31-Dec-09 4.59 4.43 2.78 2.1730-Jun-10 4.45 4.01 1.72 2.3530-Sep-10 3.09 3.04 1.14 1.5929-Oct-10 2.69 3.03 1.00 1.6830-Nov-10 3.12 2.82 1.24 1.6027-Dec-10 3.31 3.24 1.75 1.8228-Dec-10 3.31 3.41 1.87 1.9429-Dec-10 3.29 3.19 1.73 1.6430-Dec-10 3.31 3.17 1.76 1.8431-Dec-10 3.33 3.28 1.70 1.73

Spread over UST-5 Years

-400

-200

0

200

400

31-Dec-09 28-Feb-10 30-Apr-10 30-Jun-10 31-Aug-10 31-Oct-10 31-Dec-10

TURK-15 INDO-15 COLM-15

Spread over UST-10 Years

0

100

200

300


PHIL-20 COLM-20

INDO-20 GMTN TURK-20

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

31-Dec-09 5.48 3.85 5.82 5.7730-Jun-10 5.13 2.88 5.23 5.13 5.6330-Sep-10 3.92 2.39 4.18 3.97 4.4429-Oct-10 3.85 2.43 3.93 3.90 4.0530-Nov-10 4.02 2.54 4.68 4.14 4.5527-Dec-10 4.29 3.08 4.76 4.57 4.8628-Dec-10 4.29 3.23 4.90 4.67 4.8729-Dec-10 4.37 3.09 4.72 4.55 4.8730-Dec-10 4.34 3.11 4.85 4.53 4.8631-Dec-10 4.34 3.04 4.90 4.60 4.82

Spread over UST-Feb 38

0

100

200

300

400


COLM-37 INDO-38

TURK-38 TURK-40

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

31-Dec-09 6.62 6.83 4.62 6.7530-Jun-10 6.03 6.34 3.87 6.67 6.7630-Sep-10 5.21 5.30 3.63 5.75 5.7629-Oct-10 5.08 5.32 3.94 5.41 5.4530-Nov-10 5.61 5.74 4.06 5.74 5.8027-Dec-10 5.91 6.07 4.36 5.97 6.0028-Dec-10 5.98 6.21 4.50 5.97 6.0029-Dec-10 5.93 6.13 4.40 5.97 6.0130-Dec-10 5.95 6.15 4.39 5.97 6.0031-Dec-10 5.93 6.10 4.30 5.96 5.99

Chapter 7Rating, Supreme Audit Agency

Opinion, HIPICs and Conclusion

Indonesian Credit Rating

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

S&P Fitch Moody's CRC R&I J CRA

1999 CCC+ B- B3 6 B- -

2000 B- B- B3 6 B- -

2001 CCC B- B3 6 B- -

2002 CCC+ B B3 6 B- B

2003 B B+ B3 6 B- B

2004 B+ B+ B2 6 B B+

2005 B+ BB- B2 5 BB- B+

2006 B+ BB- B2 5 BB- BB-

2007 BB- BB- B1 5 BB+ BB

2008 BB- BB Ba3 5 BB+ BB

2009 BB- BB Ba3 5 BB+ BB+

2010 BB BB+ Ba2 4 BB+ BBB-

RatingTahun

Indonesia Rating Profile 1999 - 2010

show encouraging progress

Indonesian Credit Rating Development (1)

S&P: 2 notch goes to investment grade

Fitch: 1 notch goes to investment grade

Moody’s: 2 notch goes to investment grade

R & I : 1 notch goes to investment grade

JCRA : investment grade already

-

1

2

3

4

5

6

7

8

9

10

11

12

13

14

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

-

1

2

3

4

5

6

7

8

9

10

11

12

13

14

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

1998 1999 2000 2004 2005 2006

CCC-

CCC+

B

BB-

BB+

BBB

SD/DDD

R/C

CC

CCC

B-

B+

BB

BBB-

BBB+

Ca

Caa2

B3

B1

Ba2

Baa3

Baa1

C

Caa3

Caa1

B2

Ba3

Ba1

Baa2

1997 2001 2002 2003 2007 2008 2009 2010

Indonesian Credit Rating Development (2)

Selective default was experienced by the economy in 2001 and 2003

Rating has significantly upgraded after 2004

Investm

en

tg

rad

e

Moodys’s menaikan rating ke Ba2per 16 September 2009

S&P’s menaikan rating ke BBper 12 Maret 2010

Fitch’s menaikan rating ke BB+ per 25 Januari 2010

Rekapitalisasi Perbankan

Krisis ekonomi

1998

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

Investm

en

tg

rad

eN

on

In

vestm

en

t g

rad

e

S&P sempat menurunkan

rating ke Selective

Default namun direvisi

kembali 2 hari kemudian

Non

Investm

en

t g

rad

e

Indonesian Sovereign Rating – Performance Upgrading (1)

Moody’s on 16 Sept. 2009 upgraded credit rating of Indonesia from Ba3 to Ba2, with highlights as the following: “The upgade was prompted by the Indonesian economy’s relatively strong

resilience to the global recession as well as its healthy medium-term growth prospects”

“The upgrade was also prompted by an improving credit profile derived from Indonesia’s ongoing policy prudence, structural reforms, and appropriate debt management”

On 25 January 2010, Fitch’s upgraded credit rating of Indonesia from BB to BB+ with outlook stable, highlights as the following: “The rating action reflects Indonesia's relative resilience to the severe global

financial stress test of 2008 - 2009 which has been underpinned by continued improvements in the country's public finances, a fundamental sovereign rating strength, and a material easing of external financing constraint. ”

On 12 March 2010, S&P upgraded credit rating of Indonesia from BB- to BB with outlook positive, highlights as the following: "The positive outlook reflects Standard & Poor's expectation that the political

pressures experienced by the administration will prove to be only a temporary distraction from implementing its fiscal, administrative, and structural reform agenda,"

On 2 April 2010, CRC upgraded credit rating of Indonesia from clasification 5 to clasification 4, with highlights as the following: “The main factor supporting the upgrades is Indonesian impressive macroeconomic

indicators as the economy is one of the most resilient amid the global financial crises and Indonesia is one of the few countries that experienced positive economic growth in 2009. Improvement in macroeconomic performance and economic stability is the result of a combination of good and forward looking economic policy, ongoing structural reforms, as well as good debt management”

On 13 July 2010 JCRA upgraded credit rating of Indonesia into Investment Grade from BB+ to BBB-, with highlights as the following: “JCR 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.”

On 14 October 2010, R & I changed Indonesia outlook from stable to positive with a rating of BB, highlights as the following: “The outlook revision and rating affirmation reflects that Indonesia is

considered successful in maintaining high growth despite the global financial turmoil. R&I believes an upgrade to the ‘investment grade’ or BBB rating category is possible once Indonesia is set to sustain balanced economic growth by boosting investment in infrastructure.”

Indonesian Sovereign Rating – Performance Upgrading (2)

Supreme Audit Agency Opinion on Government’s Financial Report 2009

Indonesian Supreme Audit Agency (BPK) opines unqualified (Wajar Tanpa Pengecualian/WTP) to the Financial Report of all accounts related to debt management and administration

Debt management’s accountability continues to improve Internal control system Compliance to the existing regulation

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)

GDP per capita of HIPICs and Debt-Relief Countries

Honduras 1,147 1,197 1,206 1,239 1,310 1,415 1,546 1,731 Guyana 970 947 981 1,006 1,064 1,117 1,229 1,413 Bolivia 1,010 959 913 915 974 1,040 1,224 1,379 Cameroon 635 591 654 800 906 932 988 1,114 Nicaragua 771 791 766 770 828 889 958 1,013 Zambia 310 341 342 395 490 640 931 953 Sao Tome and Principe 536 625 664 711 746 796 916 Senegal 454 460 490 613 700 738 768 898 Mauritania 421 424 423 459 537 620 875 847 Ghana 247 258 292 353 402 476 553 650 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 Tanzania 268 272 274 281 303 368 359 400 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 Uganda 240 223 222 230 243 302 318 363 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 Malawi 150 144 217 193 204 216 233 255 Ethiopia 124 121 112 120 137 164 197 245

Countries 2000 2001 2002 2003 2004 2005 2006 2007Year

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

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

( USD )

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 2009 has been judged as unqualified (Wajar Tanpa Pengecualian/WTP) by the State Audit Board (BPK)

Improvement ratings, especially since 2005, and last (12 March 2010) increased by S & P rated BB- to BB even though in the midst of a global crisis that is still felt in some countries. While Indonesia has been included in the investment grade category by JCRA

© 2010Directorate Evaluation, Accounting and

SettlementDirectorate General of Debt Management

Ministry of Finance of The Republic of Indonesia

Jl. Lapangan Banteng Timur 2-4 JakartaTlp: 021-3449230 psw. 5647, 021-3864778

Fax: 021-3843712www.dmo.or.id

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