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Indonesia has a ‘surprising’ way to fund a larger government deficit — but its currency suffers

Indonesia’s currency, the rupiah, is the worst-performing Asian currency so far this year partly due to investor concerns over its central bank helping to finance a larger government deficit.
The “debt burden sharing” arrangement involves the central bank buying 397.6 trillion Indonesian rupiah ($26.97 billion) worth of government-issued bonds to fund increased spending to fight the coronavirus.
The program has been likened to an unconventional tool called quantitative easing, which has until recently been used only by major central banks in developed economies such as the U.S. and Europe.
Indonesia, Southeast Asia’s largest economy, recorded its first economic contraction in more than two decades as it struggles to contain the coronavirus outbreak.

Our View

We have been saying that the world is heading towards a recession since 2015, as the symptoms the caused the last financial crash back in 2008 have never really gone away, and we could see a lot of sticky plasters that were used to prop up housing markets as short-term solutions as opposed to properly addressing the source of the issues to prevent it from happening in the future.