Bank Indonesia Increases SBN Holdings to Support Liquidity and Monetary Operations

Significant Surge in Government Securities Purchase

Bank Indonesia has substantially increased its holdings of Government Securities (SBN) to Rp327.45 trillion by December 16, 2025, representing a 13% increase from the previous month's total of Rp289.91 trillion. This strategic move is primarily driven by the debt switching program with the government, which accounts for Rp241.99 trillion of the total SBN holdings.

Rationale Behind the Debt Switching Program

The debt switching mechanism involves purchasing existing government debt that has matured and replacing it with new securities having longer tenors. This approach not only helps in managing the government's debt profile but also supports Bank Indonesia's liquidity management and monetary operations. According to BI Governor Perry Warjiyo, this move is part of the central bank's efforts to expand liquidity in the financial system.

Implications for Monetary Policy and Financial Markets

The increased SBN holdings by Bank Indonesia has several implications for Indonesia's financial landscape. Firstly, it enhances the central bank's ability to conduct monetary operations effectively. Secondly, it helps in maintaining the health of the government's debt profile by restructuring existing obligations into longer-term securities. This coordinated effort between BI and the government demonstrates a proactive approach to financial management during a critical period.

Context and Precedents

Debt switching is a common practice in both global and domestic financial markets, used for portfolio management and maintaining liquidity. The Indonesian government, in coordination with Bank Indonesia, has utilized this mechanism to optimize debt management. The recent transaction is part of a broader agreement to handle the Rp100 trillion debt from the pandemic-era burden sharing that was due in 2025. By switching this debt, both parties aim to maintain a balanced portfolio of government securities and improve market liquidity.