Domestic Loan

This is my insight about Domestic loan. Lately, I am being involved in drafting a government regulation (Peraturan Pemerintah - PP) about Domestic Loan, or more specific, loan from national bank for funding government projects that are mostly infrastructure projects and defense and police equipments. Kompas published it with a neutral view.

There is information that national bank is over-liquid, but the rate is no less than 8 percent (per year). From national bank side, giving credit to government is no risk, and must be very gainful. Please attention that this loan is commercial loan.

Ok, now please compare with soft loan (usually for infrastructure projects) that has rate no more than 4 percent and with export credit facility (usually for defense and police equipments) that has average rate around 5 percent. Note that Indonesia has abundant donors bilaterally and multilaterally in order to get those loans.

I am not a proponent for foreign debt, but actually we can simply choose what the most efficient loan is. I am sad for the decision makers (either RI-1, RI-2, and Minister of Finance), and I am worry this decision is related with a group interest.

Update:
In my opinion, the culprit is vice president (VP), because he has a duty to lead economy ministries especially in term of state budget. In this case, this alternative funding is initially just to finance defense and police equipments, but then VP diverse the term to accelerate the development of infrastructure projects. Please ready to be a watch-dog who the owner of the winning bidder is when the projects are ready to implement.