Safeguarding Indonesia's fiscal credibility through Danantara bonds (opens original article in a new tab)

Indonesia's Danantara sovereign wealth fund issues Patriot and Merah Putih Bonds to boost development financing, but special protections for investors raise concerns about fiscal credibility and compliance with international standards.

• Danantara's issuance of Patriot Bond and Merah Putih Bond aims to strengthen investment financing and national projects under revised financial sector law.
• Special protections for primary market purchases include immunity from certain criminal claims and tax implications, raising concerns about fiscal credibility and compliance with FATF standards.
• Structural mitigation steps include defining mandate boundaries, ring-fencing Danantara's balance sheet from the state budget, enhancing transparency, establishing an independent risk committee, and improving public communication.