Indonesian government aims to continue with the restructuring of its state subsidy schemes and reallocating funds towards infrastructure projects, says Robert Pakpahan, director-general of debt management in Indonesian Ministry of Finance.

Starting with cuts in fuel subsidy in November, the government intends to tackle subsidies in electricity and food prices, says Pakpahan in an interview with The Asset at The 9th Asian Bond Markets Summit in Singapore.

The move will boost Indonesia's economic growth, which Pakpahan says should reach 6% annually. The country stands to achieve strong growth despite its focus on macroeconomic stability than the growth itself.

This approach is expected to improve its standing with credit rating agencies and build market confidence.

The country’s recently approved 2015 budget predicts a deficit of 2.2%, or approximately US$20 billion. Including refinancing, the country needs to issue aproximately US$36 billion of new debt in 2015. It aims to issue 80% of it locally, while 20% will be issued outside the country. With 44% of its outstanding debt in foreign currency, the country plans to reduce its foreign exchange exposure.

In 2014, Indonesia tapped two novel sources of funding, by issuing US$1 billion equivalent of euro bonds and a US$1.5 billion sukuk.

While investor response to the latter was enthusiastic in Malaysia, 35% of the sukuk issuance was placed in the Middle East. Indonesia plans to continue making efforts to place more issues in Islamic countries.