Indonesia plans bonds to fund cheap loans for business

JAKARTA, March 26 (Reuters) - Indonesia’s government is planning to issue bonds aimed at raising funds for struggling businesses under plans to cushion Southeast Asia’s biggest economy against the impact of the coronavirus disruption, an official said on Thursday.

To support businesses and save jobs, the government has launched measures for certain sectors, including tax breaks and relaxing rules on imports.

The planned new bonds will be issued in rupiah and the government is aiming to sell them to the central bank or private sector buyers, Susiwijono, secretary general at the Coordinating Ministry for Economic Affairs, told reporters.

The proceeds are expected to be disbursed through special loans for businesses.

“The terms for the special loan will be as easy as possible, so entrepreneurs can use the credit to support their businesses,” said Susiwijono, who uses one name.

Companies wanting to apply for the special loans have to maintain at least 90% of their workforce without cutting their salaries, he said.

The government plans to issue a regulation to ease restrictions on Bank Indonesia buying bonds directly from the government.

The central bank, by law, is currently only allowed to buy government bonds in the primary market as a non-competitive bidder for notes with less than one-year in maturity.

The government hopes to have a draft for the new rules on Friday, Susiwijono said. (Reporting by Stanley Widianto and Maikel Jefriando Writing by Fransiska Nangoy; Editing by Simon Cameron-Moore)