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Bambang Susantono's resignation signals IKN's financial distress: Observer

Tempo - June 6, 2024

Maulani Mulianingsih (Intern), Jakarta – Director of the Center for Economic and Law Studies (CELIOS), Bhima Yudhistira, observed that Bambang Susantono and Dhony Rahajoe, the former Head and Deputy Head of the Nusantara Capital or IKN Authority, were under pressure due to the financial situation of the new capital project, which is related to the government's inability to lure investors and thus rely on the State Budget.

"The resignation of the IKN Authority head and deputy head at the same time sends a signal that IKN's financial condition is in distress, indicating severe problems. So I think that since we can't find any money and are solely relying on the state budget at present, this is quite a big pressure," he said in an online media discussion broadcast on the Sahabat ICW's YouTube channel, on Wednesday, June 5.

The difficulty in securing investment for the ambitious project implies that the government will resort to utilizing the State Budget as a remedy. According to Bhima, this is an adverse signal as the State Budget itself has constraints.

He expressed concerns that there would be other potential measures to prevent the IKN project from straining the State Budget, such as connecting the IKN Authority with the Indonesia Investment Authority (INA) to seek financing, albeit in the form of debt.

"This is actually not an investment but a debt, so IKN will not be financed by investment but through debt securities. It will be a very high risk to invest directly, so it is better to buy debt securities through the government, or SBN," Bhima added.

He also highlighted the Tapera (Public Housing Savings) program, which is presently under public scrutiny. Given that the program accumulates public funds, it could serve as the easiest solution to finance IKN from the State Budget.

Bhima further noted the lack of transparency in the collection of public funds, which usually occurs only through government bonds. "If we assume that the IKN will continue to be funded by the State Budget in the long term, the public funds will be included in government bonds, and then the government can allocate them for various projects, including the IKN," he concluded.

Source: https://en.tempo.co/read/1876545/bambang-susantonos-resignation-signals-ikns-financial-distress-observe