Purbaya Cites Middle East Conflict as Catalyst Behind Government Bond Yield Increase

Jakarta: Finance Minister Purbaya Yudhi Sadewa cited escalating tensions in the Middle East as the catalyst behind a 31-basis-point (bps) quarter-to-quarter (qtq) increase in the yield on 10-year Indonesian Government Securities (SBN).
 
The renewed conflict between the United States (US) and Iran has pushed global oil prices higher once again and raised concerns over future global inflationary pressures, prompting investors to adopt a risk-off stance in the SBN market.
 
In an attempt to quell market apprehensions, Purbaya underscored that “SBN market performance has remained stable amid continued uncertainty in global financial markets.”
 
He also noted that several other emerging economies saw increases in their 10-year bond yields, including Turkey (up 524 bps), the Philippines (up 148 bps), Brazil (up 106 bps), South Korea (up 92 bps), Poland (up 59 bps), and South Africa (up 55 bps).
 
Despite market volatility, foreign investors recorded a net purchase of IDR 32.09 trillion in Indonesian government bonds during the second quarter of 2026, bringing their total net purchases for 2026 to IDR 6.99 trillion.
 
As of July 30, 2026, foreign investors posted net purchases of IDR6.36 trillion month-to-date (MTD) and IDR13.35 trillion year-to-date (YTD), with the yield on 10-year government securities rising by 15 bps MTD –,or 122 bps YTD,– reaching 7.29 percent.
  Budget financing grows 59.4%  Pubaya highlighted the 59.4 percent year-on-year (yoy) increase in budget financing realization through the second quarter of 2026, noting that the growth had supported credible and accountable State Budget (APBN) management.
 
He cited prudent and measured debt management as a key driver behind the rise, adding that the government had taken into account liquidity conditions, optimal cash management, and financial market dynamics.
 
State revenue reached IDR1,459.4 trillion by the end of the second quarter of 2026, marking strong yoy growth of 21.4 percent.
 
State expenditure, meanwhile, total IDR1,656.0 trillion during the same period, up 17.8 percent yoy. Central government expenditure in particular amounted to IDR1,298.6 trillion, rising 29.4 percent yoy.
 
(Jonathan Sianto)