The burden sharing scheme agreed between the government and Bank Indonesia may have an effect in increasing inflation. In this scheme, there are three important points that have been discussed. First, BI will bear the burden of debt for the public goods budget, which is estimated to reach IDR397.6 trillion. Secondly, the Government and BI will share the debt burden for non-public goods specifically for Micro, Small & Medium Enterprises (MSMEs) of IDR177.03 Trillion. Third, the Government will bear the entire burden of other non-public goods financing worth IDR329 trillion.
This scheme is expected to have an impact on rising inflation, although it is only temporary. This can occur as an effect of the purchase of Government Bonds (SBN) by Bank Indonesia. In addition, this can be a positive sentiment for the debt market, where yields are expected to fall while bond prices rise.
Reference:
https://nasional.kontan.co.id/news/burden-sharing-mendongkrak-inflasi-2020
