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World Bank: Indonesia deficit could reach 3.1 pct

World Bank: Indonesia deficit could reach 3.1 pct

Indonesia’s budget deficit may surpass 3 percent — the threshold set by law — if there is no fuel price hike this year, the World Bank said Wednesday.
Indonesia’s Parliament last week blocked the government’s plan to raise fuel prices by 33 percent this month. It allowed a future hike only if the six-month average price of Indonesian crude soars 15 percent above $105 per barrel that is currently budgeted.
The current six-month average stands at $116.49 per barrel.
A World Bank report estimated that the deficit could rise from the current estimate of 2.2 percent to 3.1 percent if there is no adjustment to subsidized fuel prices and oil prices average $120 per barrel over the coming year.
The World Bank said it would be more productive to redirect the subsidies, which disproportionately benefit richer households, toward promoting economic growth.
“Effective spending on infrastructure and education, along with measures to improve the business climate, could potentially boost Indonesia’s growth rate up to seven percent or higher,” said Shubham Chaudhuri, the World Bank’s lead economist for Indonesia.

Spain debt auction sees slack demand, yields up
Spain’s first bond auction after its government unveiled a harsh austerity budget failed to raise the target amount Wednesday with borrowing costs on the country’s long-term debt also showing a sharp increase.
In an auction of medium-term debt Wednesday Spain sold €2.6 billion ($3.5 billion) — short of its €2.5 billion to €3.5 billion target in the sale of notes maturing in 2015, 2016 and 2020.
The yield on benchmark Spanish 10-year bonds has been rising in recent weeks and stood at 5.53 percent in the secondary market shortly after Wednesday’s sale, compared to 4.9 percent a month ago.
The average interest rate on the three-year notes was 2.89 percent, up from 2.44 percent in the last such auction on March 15. The bid to cover ratio was 2.4, half what it was in the last auction.

Russian agricultural to sell 10 billion rubles of domestic bonds
Russian Agricultural Bank, the state lender to the farming industry, plans to sell 10 billion rubles ($340 million) of 10-year bonds, according to Troika Dialog, a co-organizer of the offering.
The Moscow-based bank will start accepting bids for the securities April 9 and the bonds, that will have a put option after three years, may be priced to yield 8.58 percent to 8.78 percent, Troika Dialog said by e-mail. VTB Capital and OAO Sberbank are also arranging the sale.

India’s 3-month, 6-month borrowing costs fall at treasury bill auction
India’s three month and one-year borrowing costs decreased as the government raised 110 billion rupees selling treasury bills at a weekly auction, the central bank said.
The government sold 60 billion rupees of 91-day bills at a minimum price of 97.85 per 100 rupee face amount, or a maximum yield of 8.8131 percent, the Reserve Bank of India said in an e-mailed statement today. This compares with 9.0227 percent at a sale on March 28. It also auctioned 50 billion rupees of 364-day bills at a cut-off price of 92.32 rupees, or a yield of 8.3417 percent, compared with 8.4006 percent on March 21.

Sugar may trade at 22.50 to 26 cents in April, FCStone says
Raw sugar prices may trade at 22.50 cents to 26 cents a pound in New York this month on uncertainty over the size of the crop in Brazil, the world’s top producer, according to broker INTL FCStone Inc.
Sugar climbed 2.2 percent in the first quarter on speculation Brazil’s output would be smaller than initially anticipated and the start of the harvests would be delayed. Archer Consulting in Sao Paulo lowered its sugar-cane crop estimate for the country’s main producing region to 512 million metric tons on March 31 from 521 million tons a month earlier.
FCStone expects “to see a bit more clarity set in once Brazilian uncertainties start to lift,” the New York-based company said in a monthly report e-mailed yesterday.