Purbaya to Launch Bond Stabilization Fund, What Is It?

TEMPO.CO, Jakarta - Indonesia’s Finance Minister Purbaya Yudhi Sadewa is set to launch a Bond Stabilization Fund (BSF), a mechanism that will use reserve funds to support the domestic bond market amid rising government bond yields and risks of capital outflows weighing on the rupiah.

The fund is designed to contain borrowing costs and stabilize government securities (SBN), as higher yields have pushed down bond prices and increased volatility. Purbaya said the government plans to activate reserve funds that have long existed but have not yet been utilized.

By intervening during periods of market stress, the fund aims to curb outflows, maintain investor confidence, and ease pressure on the currency, particularly during global financial uncertainty.

He stressed that the fund is not a new instrument but an existing mechanism that has so far remained unused. “It has never been implemented. It means it’s there, but inactive. I want to activate it,” he said in Jakarta on Wednesday, May 6, 2026.

He explained that the Bond Stabilization Fund is an initiative of the Finance Ministry, distinct from the broader Bond Stabilization Framework, which can be deployed under the Financial System Stability Committee (KSSK) protocol.

Purbaya said the BSF would be launched soon. “It will start tomorrow,” he said.

The move comes as yields on Indonesian government bonds have risen, leading to a decline in bond prices. This trend, he noted, reflects foreign investors reducing their holdings, which can trigger capital outflows and put pressure on the rupiah.

By intervening to support bond prices, the government hopes to limit outflows from the domestic bond market. “I will try to help the rupiah in my own way,” Purbaya said.

He added that the initiative does not require approval from Bank Indonesia, as the funding source comes from government reserves. However, coordination with the central bank will continue, particularly in maintaining currency stability.

According to Antara news agency, the Bond Stabilization Framework was first outlined by former finance minister Sri Mulyani Indrawati in 2018, when she said it could be activated if the Financial System Stability Committee (KSSK) assessed that economic conditions required heightened vigilance.

The framework serves as a short- to medium-term mitigation tool to anticipate potential stress in the domestic government bond market.

Read:  Fitch Forecasts Indonesia Debt Market to Hit US$800 Billion

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