## Indonesia: Selected Issues

_IMF Staff Country Reports, June 25, 2023_

## Source details

**Canonical URL:** [Indonesia: Selected Issues](https://www.imf.org/en/publications/cr/issues/2023/06/22/indonesia-selected-issues-535065)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/06/22/indonesia-selected-issues-535065/index.md)
- [Structured JSON version](/en/publications/cr/issues/2023/06/22/indonesia-selected-issues-535065/index.json)
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## Bibliographic details
- Published: June 25, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400247125.002

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### Summary findings
- The paper examines lessons for a changing investor base in Indonesia, focusing on decisions of different investors to hold local-currency (LC) government debt and how these reflect global and domestic conditions.
- Results point to the importance of global factors especially for nonresidents (NRs).
- Domestic investor holdings are mostly associated with higher debt security issuances.
- Bank of Indonesia acts as a residual financier under adverse conditions.
- Results are mostly robust to different specifications.
- NR holdings of LC debt support the bond market and domestic credit, but financial market volatility may be higher.

### Investor base dynamics and marginal investors
- The paper finds that domestic banks and nonbanks are typically the marginal investors of new LC debt issued in emerging markets (EM).
- In normal times, domestic banks and nonbanks absorb most of the new issuances of LC debt in the sample of EMs.
- During episodes of large declines in the NR share of LC debt, domestic nonbanks assume the key role in absorbing new debt supply.
- This shift in marginal investor roles has implications for market depth and volatility, given varying capacities of investor groups.

### Implications for Indonesia
- The finding that domestic nonbanks are critical during large NR share declines is important for Indonesia, given the limited role of domestic nonbanks in the economy.
- Further deepening of the domestic retail investor base, in line with the Indonesian authorities’ medium-term debt strategy, could:
  - Support market depth.
  - Reduce volatility in LC government debt markets.

### Key statistics and publication metadata
- Pages: 28
- Volume: 2023
- Issue: 222
- Series: Country Report No. 2023/222
- DOI: https://doi.org/10.5089/9798400247125.002
- Stock No: 1IDNEA2023003
- ISBN: 9798400247125
- ISSN: 1934-7685
- Publication date shown on the landing page: June 25, 2023

_International Monetary Fund. Asia and Pacific Dept "Indonesia: Selected Issues", IMF Staff Country Reports 2023, 222 (2023)._

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## Content in this bundle

- **Indonesia: Selected Issues; IMF Country Report No. 23/222; May 5, 2023**
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  - [Indonesia: Selected Issues; IMF Country Report No. 23/222; May 5, 2023 (PDF)](/-/media/files/publications/cr/2023/english/1idnea2023003.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/06/22/indonesia-selected-issues-535065_