Indonesia's state food procurement agency (Bulog) needs government funding of 20 trillion rupiah ($1.42 billion) in 2020 to finance purchases of rice needed as a buffer stock, its chief executive said on Thursday.
The agency typically takes up bank loans to purchase government rice reserves which Bulog stocks to stabilise prices and which can only be sold under the direction of the government.
But the agency is facing rising financial costs due to its large debt, Bulog's chief executive Budi Waseso told reporters after attending a parliamentary hearing where he asked for the funding.
About 80% of Bulog's revenue used to come from a social security programme which involved the government buying rice from Bulog, Waseso said, a programme which has since been changed.
"That's why we propose that the rice reserves are being funded by the government," he said.
He said Bulog currently has nearly 28 trillion rupiah in debt, a jump from 2017's debt level after the agency was directed to import nearly 1 million tonnes of rice last year.
Bulog's total short term debt stood at around 13 trillion rupiah at the end of 2017, according to its financial report.
"We are buying rice every day, which means our debt continues to increase, meanwhile there is no assignment to sell," Waseso said.
Bulog expected to procure 1.6 million tonnes of rice from local farmers next year.
In the past three years, the government budgeted 2.5 trillion rupiah per year to help finance the rice purchase, he said, to subsidise price gaps.
The request for funding comes at a time when the government is struggling to raise revenue from tax and the budget deficit is seen widening to 2.2% of GDP from 1.84% this year.
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