The 2020 State Budget Deficit Exceeds Original Estimation with 6.34% of GDP

The Government of Indonesia needs large funds to finance the 2020 state budget. This year’s budget deficit will be wider than originally estimated. Based on the latest update, the Government estimates that this year’s budget deficit will reach 6.34% of GDP. This figure is wider than the initial target in Perpres Number 54 of 2020 which is at 5.07% of GDP. Nominally, the outlook for this year’s budget deficit reached Rp 1,039.2 trillion, higher than in Perpres Number 54 of 2020 which amounted to Rp852.9 trillion. (Kontan)

Investors appetite for Indonesia’s debt instrument continue its improvement. The 5yr Credit Default Swap went below 150bps last week, reaching 118bps on 8 June 2020. In the last twelve months, the 5yr CDS recorded its peak on 23 March 2020 at 290bps. Earlier this year, the 5yr CDS recorded its historical lowest level on 20 Feb 2020 at 58bps. The 10yr CDS also exhibit similar pattern, closing last week at 182bps.

Source: Danareksa Sekuritas Debt Research

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