Consequences of housing government securities: 2025 State Budget deficit may widen
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Konsekuensi SBN perumahan: Defisit APBN 2025 bisa melebar
24 February 2025
By Annasa R. Kamalina
The government plans to launch housing Government Securities (SBNs) to finance the three million homes programme, addressing the consequences of the widening 2025 State Budget (APBN) deficit.
This is possible as housing SBNs are new issuances in addition to the planned issuance of new SBNs this year worth Rp642.56 trillion.
PT Bank Central Asia Tbk Head Economist David Sumual stated that the issuance of new SBNs will automatically alter the 2025 APBN posture in terms of expenditure, revenue, and financing.
"A new issuance will alter the APBN posture," he stated on Friday (21/2).
The limited explanation on housing SBNs, concerning their value or issuance mechanism, raises the question of whether this plan will impact the issuance of new SBNs in the 2025 APBN, valued at Rp642.56 trillion.
The potential for the deficit to widen could arise amid President Prabowo Subianto's significant budget reductions in goods and capital expenditures. These funds are being reallocated to other programmes promised during his campaign, such as the Free Nutritious Meal programme and Danantara.
Minister of Housing and Settlements, Maruarar Sirait, did not provide an explanation when asked about the amount of the housing SBN issuance.
"We have agreed not to disclose the amount initially, after consolidating it with all parties. However, I assure you that the amount is substantial," he said at the Finance Ministry last week.
Suminto, the Director General of Financing and Risk Management at the Finance Ministry, has yet to respond to Bisnis' questions regarding the plan to issue housing SBNs.
Market sentiment
The issuance of housing SBNs to support the three million homes programme is expected to impact both the domestic finance market and the fiscal market.
Yusuf Rendy Manilet, a researcher at the Centre of Reform on Economics (Core) Indonesia, stated that if the housing SBNs are added to the new issuance plan, this increase in supply will impact the finance market.
"This could increase the debt burden and reduce fiscal stability in the future," Yusuf stated.
He continued that the government must ensure that the increased debts from SBNs are managed sustainably, without significantly increasing fiscal risk.
On the other hand, the deficit will not widen if there are compensations in the form of expenditure reductions or increased state revenue.
Additionally, the effectiveness of this policy depends on the execution of the three million homes programme. Furthermore, the unclear distribution mechanism of the programme may affect investor interest in the housing SBNs.
Banjaran Surya Indrastomo, Head Economist at PT Bank Syariah Indonesia Tbk (BRIS), believes that the government lacks the necessary space to issue housing SBNs, as fiscal deficits are limited to 3% of GDP under Law No. 17/2003 on State Finance. Meanwhile, the deficit for the 2025 APBN is set at 2.53% of GDP.
"Other patterns may need to be developed. Besides public-private partnerships (PPPs), there is the real estate investment trust (REIT)," he stated yesterday.
The plan to issue housing SBNs emerged after a meeting at the Finance Ministry on Thursday (20/2) involving Finance Minister Sri Mulyani Indrawati, Bank Indonesia (BI) Governor Perry Warjiyo, Minister of Housing and Settlements Maruarar Sirait, State-owned Enterprises Deputy Minister Dony Oskaria, House of Representatives (DPR) Commission XI Chair M. Misbhakun, and the boards of directors of Himbara banks.
Finance Minister Sri Mulyani stated that the APBN will support low-income citizens in acquiring their own homes. To maximise this effort, the Finance Ministry is planning to issue SBNs.
"This is a modified mechanism from the Facility Housing Liquidity Assistance Programme (FLPP) that will be scaled up," he explained.
During the occasion, BI Governor Perry Warjiyo stated that the central bank will support financing for the public housing programme. One of the solutions is to buy the SBNs issued by the Finance Ministry in the secondary market.
BI plans to purchase SBNs in the secondary market worth Rp150 trillion this year, possibly more. Part of this purchase will be used to restructure burden sharing SBNs, also known as pandemic SBNs, worth Rp100 trillion due this year, and to support government programmes, including the three million homes initiative and food security.
"We have discussed with the Finance Minister that the funds can be used not only for debt switching of SBNs issued during the Covid-19 pandemic, but also to fund housing programmes," Perry stated.
Purchasing SBNs in the secondary market is a form of support from BI, in addition to gradually increasing incentives for the macroprudential liquidity policy from Rp23.19 trillion to Rp80 trillion for banks distributing loans to the housing sector.
