Thursday, February 22, 2018

Indonesia urges insurers to buy government securities

Life and general insurers in Indonesia should set aside funds to buy government securities, the Financial Services Authority (FSA) said.

Firdaus Djaelani, chief executive of the non-bank financial industry supervision at FSA, said this move aims to improve the absorption of government securities, which in turn helps in offsetting the deficit in the state budget.

Firdaus explained that most of the deficit was attributed to the payment for infrastructure projects.

He said that as a requirement, insurance firms are obligated to invest 30% of their total investments in government securities.

General insurers and reinsurers, for their part, need to allocate 20% of their total investment for government securities.

POJK lays down the guidelines for investments of non-bank financial service institutions in government securities.

It took effect last year when general insurance firms were required to meet minimum investment in government securities by 10% by end of 2016.


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