ProdukHukum BankIndonesia

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i

Preface ……….. iii

Report of Independent Auditor……….………... 1

Balance Sheets……….……. 3

Surplus Deficit Statement ….……….……. 5

Statement of Changes in Equities and Capital Ratio …..……….…….. 6

Cash Flow Statement……….. 7

Notes to Financial Statements A. General……….……... 9

B. Significant Accounting Policies……….. 10

C. Notes to Balance Sheet, Surplus Deficit Statement and Statement of Changes in Equities and Capital Ratio……….. 16

D. Others ...……….….. 46

Appendices Appendix 1: Organization Chart of Bank Indonesia ……… 50

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Sitting from left to right: Boediono, Governor.

Miranda S. Goeltom, Senior Deputy Governor.

Standing from left to right:

Ardhayadi Mitroatmodjo, Deputy Governor.

S. Budi Rochadi, Deputy Governor.

Muliaman D. Hadad, Deputy Governor.

Siti Ch. Fadjrijah, Deputy Governor.

Budi Mulya, Deputy Governor.

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iii

PREFACE

With praise to the Almighty God, herewith we present the Annual Financial Statements of Bank Indonesia for the year 2008, which had been audited by the Supreme Audit Board of the Republic of Indonesia (BPK-RI). The Financial Statements include the Balance Sheet as at December 31, 2008, as well as the Statement of Surplus Deficit, Changes in Equity, and Cash Flow, for the period of January 1 to December 31, 2008 along with Notes to the Financial Statements.

This Annual Financial Statements of Bank Indonesia for the year 2008 has obtained Unqualified Opinion from BPK-RI. This achievement, which is the sixth for six consecutive years, is an achievement that we can be proud of and shows Bank Indonesia’s commitment to promote transparency and accountability in the hope of achieving good governance. In turn, we hope this will increase stakeholders’ trust, therefore Bank Indonesia can perform its future duties better.

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In this occasion, the Board of Governors of Bank Indonesia wishes to express our sincere appreciation to BPK-RI for their advices and recommendations intended for a continuing improvement in Bank Indonesia. Our sincere gratitude also goes to the heads of all working units and parties in Bank Indonesia, who have shown strong commitments and cooperation in performing their tasks and implementing the advices and recommendations from BPK-RI, so that Bank Indonesia can maintain the Unqualified Opinion.

Alongside with the publication of this book, Annual Financial Statements for the year 2008 are also published through our website (http://www.bi.go.id), as well as a part of Bank Indonesia Annual Report.

Finally, hopefully these Financial Statements will serve as a beneficial reference and offer added value to the public.

Jakarta, May , 2009

DEPUTY GOVERNOR OF BANK INDONESIA

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1

THE SUPREME AUDIT BOARD REPUBLIC OF INDONESIA

Number

: 05/01/LHP/XV/04/2009

REPORT OF INDEPENDENT AUDITOR

We have audited the accompanying balance sheets of Bank Indonesia as at Desember 31, 2008 and Desember 31, 2007, and the related statements of surplus deficit, changes in equity, and cash flows for the years ended. These financial statements are the responsibility of the management of Bank Indonesia. Our responsibility is to express an opinion on these financial statements based on our audits.

We have also performed tests on internal control and Bank Indonesia’s compliance to regulations. The structures of internal control and the compliance to regulations are the responsibility of the management of Bank Indonesia. The results of this examination are reported separately from Independent Auditor Report of the Financial Statements of Bank Indonesia.

We conducted our audits in accordance with Government Auditing Standards (SAP) established by the Supreme Audit Board of the Republic of Indonesia (BPK-RI), which incoporate the Professional Public Accounting Standards (SPAP) established by the Indonesian Institute of Accountants (IAI). The standards require that we plan and perform our audits to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporing the amounts and disclosure in the finacial statements. An audit also includes assessing the accounting principles used and significant estimation made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinión.

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2

from Bank Indonesia’s surplus, which is accruing to the Government and shall be performed in the event that the capital to monetary liabilities ratio of Bank Indonesia has reached 10% (ten percent). Such payment mechanism may cause uncertainty regarding the time and the amount of the bond’s payment by the Government in the future.

The results of the compliance test to regulations and internal control are delivered in separate reports Number 05/02/LHP/XV/04/2009 and Numnber 05/03/LHP/XV/04/2009 dated April 15, 2009.

Jakarta, April 15, 2009

The Supreme Audit Board Republic of Indonesia

Signed

Syafri Adnan Baharuddin, Ak. MBA

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(In Millions of Rupiah)

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

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I. ASSETS

Notes December 31, 2008 December 31, 2007

1. Gold B.6, C.1 22,230,636 18,492,363

2. Foreign Currencies B.4, B.7, C.2 11,055 8,844

3. Special Drawing Rights B.4, B.8, C.3 373,952 93,582

4. Demand Deposits B.4, B.9, C.4 34,263,410 24,767,545

5. Time Deposits B.4, B.10, C.5 7,078,295 42,730,046

6. Marketable Securities B.4, B.11, C.6 499,632,381 592,984,296

7. Government Bonds B.12, C.7 19,558,846 15,849,567

8. Securities Purchased Under

Resale Agreements B.13, C.8 2,885,392 239,466

9. Claims 284,512,763 286,986,045

9.1 On Government B.4, B.14, C.9 263,735,827 264,174,935

9.2 On Banks B.15, C.10 11,978,714 12,318,440

9.3 On Others B.4, B.16 C.11 8,798,222 10,492,670

10. Equity Participation B.17, C.12 932,753 894,711

11. Other Assets B.18, B.19 C.13 9,194,090 7,690,761

12. Allowance for Bad Debts B.20, C.14 (16,474,382) (17,710,243)

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4

II. LIABILITIES AND EQUITY

Notes December 31, 2008 December 31, 2007

A. LIABILITIES

1. Currency in Circulation B.21, C.15 264,399,922 220,794,779

2. Demand Deposits 185,447,235 192,066,106

2.1 Government B.4, B.22, C.16 97,228,550 21,918,360

2.2 Bank B.4, B.22, C.17 85,197,077 168,612,400

2.3 Others B.4, B.22, C.18 3,021,608 1,535,346

3. Bank Indonesia Certificates B.23, C.19 175,342,804 244,570,156

4. Bank Indonesia Sharia Certificates B.24, C.20 2,824,300 2,598,500

5. Bank Indonesia Deposit Facilities B.25, C.21 75,673,367 48,925,248

6. Securities Sold Under Repurchase

Agreements B.26 0 0

7. Loans from Government B.4, B.27, C.22 206,023 223,614

8. Foreign Borrowings B.4, B.28, C.23 7,479,880 6,798,280

9. Other Liabilities B.19, C.24 2,980,279 145,420,665

TOTAL LIABILITIES 714,353,810 861,397,348

B. EQUITY

1. Capital C.25 7,610,885 7,610,885

2. General Reserves C.26 49,663,865 50,767,097

3. Statutory Reserves C.26 13,364,549 13,683,337

4. Unrealized Gains/Losses B.29, C.27 61,957,127 40,990,336

5. Current Year Surplus (Deficit) 17,248,955 (1,422,020)

TOTAL EQUITY 149,845,381 111,629,635

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and January 1 to December 31, 2007 (In Millions of Rupiah)

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Notes January 1 to December 31,

2008

January 1 to December 31,

2007

A. REVENUES

1. Monetary Operations 44,731,394 28,387,328

1.1 Foreign Reserve Management C.28 40,203,455 24,213,515

1.2 Money Market Activities 249,644 78,047

1.3 Credit and Financing C.29 4,278,295 4,095,766

2. Payment System Services C.30 168,974 153,123

3. Banking Services 180,546 145,864

4. Others C.31 250,236 350,158

TOTAL REVENUES 45,331,150 29,036,473

B. EXPENSES

1. Monetary Operations 21,272,917 25,032,584

1.1 Open Market Operations C.32 20,837,295 24,463,229

1.2 Foreign Reserve Management C.33 36,313 25,624

1.3 Foreign Loan Management C.34 260,808 368,070

1.4 Others 138,501 175,661

2. Payment System Operations C.35 1,650,612 1,646,299

2.1 Currency Circulation 1,585,365 1,568,871

2.2 Payment System Sponsoring 65,247 77,428

3. Banking Regulations and Supervisions 158,202 153,288

4. General and Others 5,000,464 3,626,322

4.1 Human Resources and Logistics C.36 4,105,046 3,541,579

4.2 Others 895,418 84,743

TOTAL EXPENSES 28,082,195 30,458,493 SURPLUS (DEFICIT) 17,248,955 (1,422,020)

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December 31,

2007 Addition Deduction

December 31, 2008

I. EQUITY

1. Capital 7,610,885 0 0 7,610,885

2. General Reserves 50,767,097 318,788 1,422,020 49,663,865

3. Statutory Reserves 13,683,337 0 318,788 13,364,549

4. Unrealized Gains (Losses) 40,990,336 20,966,791 0 61,957,127

5. Current Year Surplus (Deficit) (1,422,020) 17,248,955 (1,422,020) 17,248,955

Total 111,629,635 38,534,534 318,788 149,845,381

II. MONETARY LIABILITIES = 701,524,534 III. CAPITAL RATIO BEFORE DEDUCTION OF GOVERNMENT’S SHARE OF BI’S

SURPLUS (Note C.37) = 10.38% IV. PAYMENT OF SURPLUS TO GOVERNMENT = 2,646,356 V. CAPITAL RATIO AFTER DEDUCTION OF GOVERNMENT’S SHARE OF BI’S

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January 1 to December 31, 2008 1. CASH FLOWS FROM OPERATING ACTIVITIES

1.1 Surplus 17,248,955

1.2 Increase in Gold (3,738,273)

1.3 Increase in Foreign Currencies (2,211)

1.4 Increase in Special Drawing Rights (280,370)

1.5 Increase in Demand Deposits (9,495,865)

1.6 Decrease in Time Deposits 35,651,751

1.7 Decrease in Marketable Securities 93,351,915

1.8 Increase in Government Bonds (3,709,279)

1.9 Increase in Securities Purchased Under Resale Agreements (2,645,926)

1.10 Decrease in Claims: 2,473,282

1.10.1 Decrease in Claims on Government 439,108

1.10.2 Decrease in Claims on Banks 339,726

1.10.3 Decrease in Claims on Others 1,694,448

1.11 Increase in Other Assets (1,480,779)

1.12 Adjustments: (1,046,339)

1.12.1 Fixed Asset Depreciation 197,725

1.12.2 Decrease in Allowance for Bad Debts (1,235,861)

1.12.3 Intangible Asset Amortization (8,203)

1.13 Increase in Currencies in Circulation 43,605,143

1.14 Decrease in Demand Deposits: (6,618,871)

1.14.1 Increase in Government Demand Deposits 75,310,190

1.14.2 Decrease in Bank Demand Deposits (83,415,323)

1.14.3 Increase in Other Demand Deposits 1,486,262

1.15 Decrease in Bank Indonesia Certificates (69,227,352)

1.16 Increase in Bank Indonesia Sharia Certificates 225,800

1.17 Increase in Bank Indonesia Deposit Facilities 26,748,119

1.18 Increase in Securities Sold Under Repurchase Agreements 0

1.19 Decrease in Other Liabilities (142,440,386)

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8

January 1 to December 31, 2008

2. CASH FLOWS FROM FINANCING ACTIVITIES

2.1 Increase in Equity Participation (38,042)

2.2 Increase in Fixed Assets (228,610)

2.3 Decrease in Leasing Assets 0

2.4 Decrease in Intangible Assets 16,538

Net Cash Flows from Financing Activities (250,114)

3. CASH FLOWS FROM INVESTING ACTIVITIES

3.1 Increase in Government Equity Participation 0

3.2 Decrease in Loans from Government (17,591)

3.3 Increase in Foreign Borrowings 681,600

3.4 Decrease in Capital 0

3.5 Decrease in General Reserve (1,103,232)

3.6 Decrease in Statutory Reserve (318,788)

3.7 Increase in Unrealized Gains/Losses 20,966,791

3.8 Distribution of Previous Year Surplus 1,422,020

Net Cash Flows from Investing Activities 21,630,800 4. NET INCREASE/DECREASE IN CASH FLOWS/CASH

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9 A. General

Bank Indonesia is the Central Bank of the Republic of Indonesia that was established based on Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004.

In accordance with Article 7 of Act of the Republic Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004, the objective of Bank Indonesia is to achieve and maintain the stability of the Rupiah. To accomplish the objective, Bank Indonesia has several duties as follows:

(i) To formulate and to implement monetary policies;

(ii) To regulate and to safeguard the smoothness of the payment system; and (iii) To regulate and to supervise banks.

In relation to those duties, activities of Bank Indonesia are not performed on commercial basis, but more directed on controlling base money and supervising the national banking system.

In performing its duties, Bank Indonesia is led by the Board of Governors that consists of a Governor, a Senior Deputy Governor and assisted by at least 4 (four) and not more than 7 (seven) Deputy Governors. The members of the Board of Governors for the period ended December 31, 2008 were as follows:

In the period of January 1 to December 31, 2008, Governor Burhanuddin Abdullah has been respectfully discharged due to the completion of their service period. Afterward, in accordance with Presidential Decree Number 34/P 2008 dated May 15, 2008, Boediono was appointed as Governor.

Bank Indonesia's headquarter is located on Jl. MH Thamrin No. 2 Jakarta, with 41 (forty-one) branches around Indonesia and 4 (four) overseas representative offices. Total employees as at December 31, 2008 were 6.091 persons.

Governor : Boediono

Senior Deputy Governor : Miranda S. Goeltom Deputy Governor : Hartadi A. Sarwono

Siti Ch. Fadjrijah

Muliaman D. Hadad S. Budi Rochadi

Budi Mulya

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10 B. Significant Accounting Policies

The presentation of the Annual Financial Statements of Bank Indonesia for the year 2008 was in accordance with the Circular Letter of Bank Indonesia Number 8/82/INTERN dated December 26, 2006 concerning the Financial Statements of Bank Indonesia.

The accounting policies adopted by Bank Indonesia are regulated in Bank Indonesia Financial Accounting Guidance (Pedoman Akuntansi Keuangan Bank Indonesia - PAKBI). PAKBI is in conformity with the Indonesian Financial Accounting Standards (Standar Akuntansi Keuangan - SAK), International Accounting Standards (IAS), Bank Indonesia’s internal regulations and best practices in other central banks, as well as the agreements among Bank Indonesia, the Supreme Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan Republik Indonesia – BPK RI) and the Financial Accounting Standards Board of the Indonesian Institute of Accountants (Ikatan Akuntan Indonesia - IAI). In order to maintain its updated conformity with SAK and IAS, PAKBI has been continuously revised, most recently as declared in the Circular Letter Number 8/50/INTERN dated September 28, 2006 concerning Bank Indonesia Financial Accounting Guidance.

The significant accounting policies that have been consistently applied by Bank Indonesia on the Financial Statements for the period of January 1 to December 31, 2008 are as follows:

1. Basis for Preparation of Financial Statements

The financial statements of Bank Indonesia are presented in millions of Rupiah, and prepared on the accrual basis using the historical cost concept, except for certain accounts that are presented using other measurements as stated in the accounting policy of each account.

2. Management Estimations

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimations and assumptions that may affect the amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of financial statements and the amount of revenues and expenses reported during the year. The actual results may differ from those estimations.

3. Recognition of Interest Income

Interest income from investment of Bank Indonesia’s funds is recognized on accrual basis. Accrued interest income that was previously recognized is reversed at the time when the placements are classified as nonperforming.

4. Transactions in Foreign Currencies

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under Equity section, until the foreign exchanges are decreased. Bank Indonesia uses Net Currency Position (NCP) method in administrating and recording foreign currency assets and liabilities. With this method, the result of the revaluation of foreign currency assets and liabilities is calculated from the multiplication of the net position of the foreign currency assets and liabilities with the difference between the balance sheet exchange rate and average cost of the foreign exchange currencies.

The rates of major foreign exchanges as at December 31, 2008 were IDR10,950.00/USD, IDR15,432.40/EUR, IDR15,802.51/GBP, IDR16,948.52/SDR and IDR12,122.90/JPY100.00.

5. Related Parties

Related parties of Bank Indonesia are as follows:

a. Institutions/entities that are controlled or directed by Bank Indonesia. These include among others entities in which Bank Indonesia’s ownership is more than 20%.

b. The employees of Bank Indonesia and entities/foundations/enterprises that represent interests of the employees of Bank Indonesia. These include among others Bank Indonesia Pension Fund (Dana Pensiun Bank Indonesia – DAPENBI) and Bank Indonesia Employees Welfare Foundation (Yayasan Kesejahteraan Karyawan Bank Indonesia – YKK-BI).

c. Entities/institutions/foundations that are established to support activities of Bank Indonesia. These include among others Indonesian Banking Development Foundation (Yayasan Pengembangan Perbankan Indonesia – YPPI).

All significant transactions with related parties, whether or not made under similar terms and conditions as those conducted with third parties, are disclosed in the financial statements.

6. Gold

Gold consists of gold bars, gold time deposits, and gold marketable securities, which are revalued periodically at fair market values. The differences due to the changing of market price of Gold are recorded in the Gold Revaluation Reserves account in Exchange Rate and Marketable Securities Revaluation Reserves item under Equity section.

7. Foreign Currencies

Foreign Currencies are presented on the balance sheet at nominal value. 8. Special Drawing Rights

Special Drawing Rights (SDRs) represent mandatory reserves in the International Monetary Fund (IMF) denominated in SDR. SDRs are presented on the balance sheet at nominal value that are added with accrued interest on holding and remuneration. 9. Demand Deposits

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12 10. Time Deposits

Time Deposits in foreign currencies in correspondent banks are presented on the balance sheet at nominal value that are added with the accrued interest.

11. Marketable Securities

Marketable Securities (SSB) in Rupiah and foreign currencies are classified based on the purpose of ownership; i.e. Held to Maturity (HTM), which is presented at cost after premium/discount amortization, Trading and Available for Sale (AFS), which are presented at fair market value. The differences due to the changing of market price of Available for Sale securities are recorded in the Marketable Securities Revaluation Reserves Account, and presented in Unrealized Gains/Losses item, under Equity section, while the differences due to the changing of market price of Trading securities are recorded as gains or losses for the current year. Accrued interests are presented as a part of the Marketable Securities account.

12. Government Bonds

Government Bonds consist of: a. Treasury Bills (SPN)

Treasury Bills are State Debt Securities with up to one-year period. b. Marketable Treasury Bonds (ON)

The marketable treasury bonds are State Debt Securities with more than one-year period.

SPN and Available-for-Sale ON owned by Bank Indonesia are presented at fair market value. The difference due to the market value changes of SPN and Available-for-Sale ON is recorded on Marketable Securities Revaluation Reserves account in Unrealized Gains or Losses item under Equity section. The accrued interests of SPN and Available-for-Sale ON are presented as a part of Government Bonds item.

13. Securities Purchased Under Resale Agreements

Securities Purchased Under Resale Agreements are securities owned by banks that are sold to Bank Indonesia with an agreement to repurchase under a specific price and terms. Securities Purchased Under Resale Agreements are presented at their selling price. The differences between the selling price and the repurchase price are recognized as interest income.

14. Claims on Government

Claims on Government consist of State Debt Securities (Surat Utang Pemerintah – SUP), Government Bonds (Obligasi Negara – ON), and other claims on government. a. State Debt Securities

1) State Debt Securities are long-term bonds issued by the Government to Bank Indonesia which are non-transferable and non-marketable, with regulated payment schedule of outstanding value and interest.

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13 b. Government Bonds

Government Bonds in this item are long-term bonds issued by the Government to Bank Indonesia which are non-transferable and non-marketable, and presented at their outstanding nominal value.

c. Other Claims on Government

Other claims on Government, including interests of the claims, are presented on the balance sheet at the outstanding value of the claims.

15. Claims on Banks

Claims on Banks are presented on the balance sheet at the outstanding value plus accrued interests.

16. Claims on Others

Claims on Others, which include other claims on Operation-Suspended Banks (Bank Beku Operasi – BBO) and Business-Activity-Suspended Banks (Bank Beku Kegiatan Usaha - BBKU), channeling credits, and remaining program credits, are presented on the balance sheet at the outstanding value.

17. Equity Participation

In accordance with Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004, Bank Indonesia may conduct an equity participation in legal entities or other entities deemed necessary in the implementation of the tasks of Bank Indonesia.

Equity participation with less than 20 percent ownership is presented at cost; meanwhile equity participation with the ownership more than 20 percent is presented at cost price added by profit or loss of the subsidiary company subsequent to the equity participation.

Equity participation conducted by Bank Indonesia before the enactment of Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004, should be divested before January 2009; therefore, such kind of equity participation is not consolidated in the Financial Statements of Bank Indonesia.

In case of permanent impairment in the value of equity participation, the recorded value of equity participation is adjusted accordingly.

18. Fixed Assets

Fixed assets are presented on the balance sheet as part of other assets at cost less accumulated depreciation.

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14 19. Employee Benefits

Bank Indonesia provides an allowance for long-term benefits and post-employment benefits for the employees who have rendered their services and are entitled to accept the future benefits. Bank Indonesia develops the defined benefit plan, which is funded through contribution to Bank Indonesia Pension Fund (Dana Pensiun Bank Indonesia), and Housing Loan (Baperum) as well as Pension Health Facility (BKP) which are funded through contribution to YKKBI. The amount of contribution and benefit liabilities are calculated periodically by an independent actuary.

The costs and liabilities of employee benefits are determined separately for each plan by using projected unit credit actuary method.

20. Allowance for Bad Debts

Bank Indonesia provides a combined allowance for bad debts, including allowance for claims, placements, and other assets, in order to present the assets fairly. The allowance percentage is decided by considering the inherent rate of risk in each particular asset, which are reflected by some factors e.g. investment rating, debtors’ financial position, performance of prior payment, bank’s composite grade, relationship and agreement between Bank Indonesia and debtors, and other relevant factors. 21. Currency in Circulation

Currency in circulation is presented as liabilities at total nominal value of bank notes and coins that has been declared as legal tender by Bank Indonesia and is not under the possession of Bank Indonesia.

22. Demand Deposits

Demand deposits of other parties in Bank Indonesia consist of demand deposits in Rupiah and demand deposits in foreign currencies, which are presented at nominal value. Specifically for the IMF demand deposit which is used to record payables to IMF, revaluation is conducted every April 30 using SDR exchange rate to Rupiah issued by IMF at its closing book date. The IMF demand deposit is presented at nominal value. 23. Bank Indonesia Certificates

Bank Indonesia Certificates (Sertifikat Bank Indonesia – SBI) are securities in Rupiah that are issued by Bank Indonesia to recognize short-term payables. SBI’s are presented on the balance sheet at nominal value deducted by a discount paid in advance.

24. Bank Indonesia Sharia Certificates

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15 25. Bank Indonesia Deposit Facilities

Bank Indonesia Deposit Facilities (Fasilitas Simpanan Bank Indonesia – FASBI) is deposit facilities given to banks by Bank Indonesia. FASBI are presented on the balance sheet at nominal value deducted by discount paid in advance.

26. Securities Sold Under Repurchase Agreements

Securities Sold Under Repurchase Agreements are Bank Indonesia Certificates and/or securities owned by BI that are purchased by banks with an agreement to resale under a specific price and terms. These securities are presented at cost. The differences between the purchase price and the reselling price are recognized as interest expense. 27. Loans from Government

Loans from Government consist of loans due to Two Step Loan in Rupiah and Government obligation in foreign currencies, which are presented at the outstanding amount after discount amortization.

28. Foreign Borrowings

Foreign borrowings or loan facilities received by Bank Indonesia from foreign parties in foreign currencies are presented at the outstanding amount after calculation of accrued interest.

29. Unrealized Gains/Losses

Unrealized Gains/Losses present the recognition of securities revaluation, translation of assets and liabilities in foreign exchange into Rupiah, and other assets revaluation. 30. Derivative Transaction

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C. NOTES TO BALANCE SHEETS, SURPLUS DEFICIT AND STATEMENT OF CHANGES IN EQUITIES AND CAPITAL RATIO

1. Gold

The balance of gold as at December 31, 2008 and as at December 31, 2007 was TOZ2,347,046.3100 or equivalent to IDR22,230,636 million and TOZ2,347,046.3100 or equivalent to IDR18,492,363 million, respectively.

The value of gold was presented based on gold current market price available in London market at December 31, 2008, which was USD865.00/TOZ.

2. Foreign Currencies

The balances of foreign currencies as at December 31, 2008 and December 31, 2007 were equal to IDR11,055 million and IDR8,844 million respectively, with details as follows:

3. Special Drawing Rights

Special Drawing Rights is a mandatory deposit due to the Indonesian Government’s membership in the International Monetary Fund (IMF) denominated in SDR. This balance is derived from SDR allocation and its increase is due to addition of SDR allocation, purchase of SDR and income in SDR such as interest on SDR holding, remuneration and refund of charges. The SDR balance decreases are due to various payments in SDR such as commitment fee, service charges, periodic charges, SDR allocation charges and assessment fee. SDR is issued by IMF for its members according to quota proportion of each member of IMF at the point of issuance. SDR mainly functions as a supplementary foreign reserve.

Total of SDR as at December 31, 2008 was SDR22,064,022.00 or equivalent to IDR373,952 million and as at December 31, 2007 was SDR6,339,299.39 or equivalent to IDR93,582 million.

December 31, 2008 December 31, 2007

OCY IDR million OCY IDR million

Foreign currencies in vault consist of:

USD 996,209.83 10,908 922,103.87 8,685

JPY 1,023,146.00 124 1,473,969.00 123

GBP 1,303.41 21 1,546.63 29

SGD 218,25 2 1,090.14 7

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17 4. Demand Deposits

Demand deposits in foreign currencies in central banks and overseas correspondent banks as at December 31, 2008 and December 31, 2007 amounted to IDR34,263,410 million and IDR24,767,545 million respectively, with details as follows:

OCY

Central Banks Correspondent Banks IDR million IDR million

USD 2,426,963,216.36 23,627,732.04 26,833,971 15,350,166

JPY 24,301,672,854.00 9,154,581,294.86 4,055,868 6,173,278

EUR 53,765,694.53 3,969,339.10 890,990 816,048

GBP 116,777,804.10 4,020,223.55 1,908,912 1,430,192

Other Foreign

Currency 573,669 997,861

34,263,410 24,767,545

As part of demand deposit in central banks, there were also placements in Repo and Overnight, among them in the Federal Reserve Bank of New York, New York and Bank of Japan, Tokyo amounted to USD2,425,900,000.00 or equivalent to IDR26,563,605 million and JPY24,292,825,279.00 or equivalent to IDR2,944,995 million respectively. Income from Repo & Overnight was recognized on the due date.

5. Time Deposits

The balances of time deposits in foreign currencies as at December 31, 2008 and December 31, 2007 were IDR7,078,295 million and IDR42,730,046 million respectively, with details as follows:

OCY IDR million OCY IDR million

Correspondent banks:

USD 0.00 0 1,873,755,831.74 17,648,906

GBP 145,000,000.00 2,291,364 750,000,000.00 14,103,075

EUR 0.00 0 60,000,000.00 825,585

AUD 200,000,000.00 1,511,102 766,000,000.00 6,303,353

NZD 437,000,000.00 2,764,152 402,000,000.00 2,915,561

6,566,618 41,796,480

Special Time Deposits:

IBRD (USD) 0.00 0 24,000,000.00 226,056

IMF PRGF (SDR) 25,000,000.00 423,713 25,000,000.00 369,053

IMF Trust for PRGF

(SDR) 4,850,030.00 82,200 4,850,030.00 71,597

Indover (EUR) 0.00 0 2,268,901.08 31,219

505,913 697,925

Accrued Interest 5,764 235,641

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a. Special time deposits in International Bank for Reconstruction and Development (IBRD) was time deposit due to Central Bank Facility at IBRD, Washington DC.

b. Special time deposits in IMF was Poverty Reduction and Growth Facility on IMF amounted to SDR25,000,000.00 or equivalent to IDR423,713 million as at December 31, 2008 and equivalent to IDR369,053 million as at December 31, 2007.

c. Other special time deposits in IMF were Trust for PRGF Operations for the Heavily Indebted Poor Countries (HIPC) and Interim PRGF Subsidy Operations (“the Trust”) amounted to SDR4,850,030.00 or equivalent to IDR82,200 million as at December 31, 2008.

d. Special time deposits in Indover Bank was time deposit due to loan to subsidiary company. As at April 30, 2008 the deposits have been repaid completely by Indover Bank.

The period and average interest rate range of the time deposits were as follows:

IDR million IDR million

Nominal value based on period: a. Time Deposits in correspondent banks:

- less than 1 month 6,566,618 5,654,637

- 1 – 3 months 0 32,892,288

- more than 3 months

b. Special Time Deposits:

0 3,249,555

Interest p.a. Interest p.a.

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19 6. Marketable Securities

Marketable securities owned by Bank Indonesia are in foreign currency with a balance at December 31, 2008 and December 31, 2007 of IDR499,632,381 million and IDR592,984,296 million respectively with details as follows:

Note:

*) Including accumulated return on Reinvestment of Cash Collateral from Securities Lending.

Interest rate range

- more than 3 months

-

December 31, 2008 December 31, 2007 Acquisition cost

IDR million IDR million IDR million IDR million IDR million IDR million Held to Maturity 76,451,689 76,451,689 105,518,268 105,518,268

Available for Sale:

• BI Portfolio 390,107,483 17,709,658 407,817,141 324,412,206 4,997,224 329,409,430 • External Portfolio

Manager:

- Counterparty 4,434,339 182,909 4,617,248 3,851,398 (27,752) 3,823,646 - Asian Bond Fund 1,642,500 407,624 2,050,124 1,412,850 303,915 1,716,765

• Automatic

Investment 2,185,455 4,522 2,189,977 3,428,621 18,644 3,447,265

• Reinvestment of

cash collateral from

securities lending *) 0 0 0 143,207,029 143,207,029

Accrued interest 6,506,202 5,861,893

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20

Marketable securities are placements denominated in foreign currencies, predominantly in JPY, USD, GBP, EUR, AUD and NZD.

As at December 31, 2008 there were no marketable securities placed in Third Party Securities Lending (TPSL), hence the position of Reinvest Cash Collateral SL is zero.

Among Held-to-Maturity securities outstanding as at December 31, 2008 amounted to IDR76,451,689 million, IDR30,778,488 million will be due within 1 year, IDR33,528,749 million will be due within 1 to 5 years and IDR12,144,452 million will be due within 5 to 10 years.

Among Available for Sale securities categorized in BI Portfolio and Automatic Investment, as at December 31, 2008 amounted to IDR410,007,118 million, IDR144,183,252 million will be due within 1 year, IDR220,270,960 million will be due within 1 to 5 years and IDR45,552,906 million will be due within 5 to 10 years.

7. Government Bonds

The balance of Government Bonds as at December 31, 2008 and December 31, 2007 were IDR19,558,846 million and IDR15,849,567 million respectively, with details as follows:

December 31, 2008 December 31, 2007 Acquisition

IDR million IDR million IDR million IDR million IDR million IDR million a. Marketable Treasury

Bonds

- Available for Sale 17,488,804 (1,036,609) 16,452,195 15,496,633 (39,204) 15,457,429 - Accrued interest 0 0 411,668 0 0 392,138

17,488,804 16,863,863 15,496,633 15,849,567

b. Treasury Bills

- Available for Sale 2,637,609 57,374 2,694,983 0 0 0

- Accrued interest 0 0 0 0 0 0

2,637,609 2,694,983 0 0

Total 20,126,413 19,558,846 15,496,633 15,849,567

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21

SUN were acquired by Bank Indonesia in the secondary market starting on April 2005, aimed for building SUN stocks, which was intended to substitute Bank Indonesia Certificates (SBI) as monetary instruments as stated in Act of State Treasury Number 1 of 2004. This process is still under discussion between Bank Indonesia and the Government. SPN was acquired by Bank Indonesia through the primary market starting from May 2008.

ON available for sale amounted to IDR3,030,222 million will be due within 1 to 5 years, IDR5,923,850 million will be due within 5 to 10 years and IDR7,498,123 million will be due over 10 years.

8. Securities Purchased under Resale Agreements

Securities Purchased under Resale Agreements as at December 31, 2008 and December 31, 2007 amounted to IDR2,885,392 million and IDR239,466 million respectively. They consisted of Bank Indonesia Certificates–Repo (SBI–Repo) and Government Bonds – Repo (SUN – Repo) with a period of one day, Fine Tune Expansion (FTE) transaction and Government Marketable Sharia Securities – Repo (Surat Berharga Syariah Negara Repo – SBSN Repo) with a period of up to 14 days.

9. Claims on Government

Claims on Government as at December 31, 2008 and December 31, 2007 amounted to IDR263,735,827 million and IDR264,174,935 million respectively, with details as follows:

- Claims on Government in IDR _{263,703,880 264,147,455}

- Claims on Government in Foreign

Currency 31,947 27,480

263,735,827 264,174,935

a. Claims on Government in IDR

Claims on Government in IDR as at December 31, 2008 and December 31, 2007 were IDR263,703,880 million and IDR264,147,455 million respectively, with details as follows:

- Government Bonds (SUP) 128,816,069 130,034,662

- Treasury Bonds (ON)

No. SRBI-01/MK/2003 129,344,302 129,344,302

- Other claims on Government in Rupiah 5,543,509 4,768,491

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22 1) Government Bonds (SUP)

The values of SUP as at December 31, 2008 and December 31, 2007 were as follows:

Nominal value:

a) SUP Number SU-002/MK/1998 (SU-002)

SU-002 was issued on October 23, 1998 based on Presidential Decree Number 55 of 1998 concerning Domestic Loans in the form of Debt Securities in relation with Government Regulation Number 60 of 1998 concerning Addition of The Republic of Indonesia’s Equity Participation in PT Bank Ekspor Impor Indonesia (PT. BEII).

The nominal value of SU-002 was IDR20,000,000 million, non-transferable and non-marketable.

As stated in Minister of Finance Letter Number S-505/MK.08/2006 dated November 24, 2006, since January 1, 2006 the terms and conditions of SU-002 has been amended as follows:

(1) SU-002 interest rate is 1% per annum calculated based on the outstanding principal balances, without indexation and paid in cash by the Government to Bank Indonesia semi-annually on April 1 and October 1. The first payment was settled on December 1, 2006 to settle interest due on April 1, 2006 and October 1, 2006.

(2) Principal repayment is divided into 31 installments. The first installment is due on April 1, 2010, the next installments will be due on April 1 and October 1 each year until the final installment is due on April 1, 2025. Principal repayment may be settled in form of cash or marketable treasury bonds.

This amendment of SU-002 is part of the Agreement between the Minister of Finance and the Governor of Bank Indonesia dated April 18, 2006 regarding the Restructurization of Government Bond Number SU-002/MK/1998 and SU-004/MK/1999, that was supported by Commission XI of the DPR-RI in the work meeting between Commission XI DPR-RI with the Minister of Finance and the Governor of Bank Indonesia dated October 11, 2006.

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23

of Finance has issued the fifth addendum of SU-002 that amends the interest rate from 1% to 0.1% per annum and has been effective since January 1, 2009.

b) SUP Number SU-004/MK/1999 (SU-004)

SUP Number SU-004/MK/1999 was issued on May 28, 1999 based on Presidential Decree Number 55 of 1998 concerning Domestic Loans in the Form of Debt Securities in relation with Agreement between the Government and Bank Indonesia dated February 6, 1999.

The nominal value is IDR53,779,500 million, transferable and non-marketable.

As stated in Minister of Finance Letter Number S-505/MK.08/2006 dated November 24, 2006, since January 1, 2006 the terms and conditions of SU-004 has been amended as follows:

(1) SU-004 interest rate is 3% per annum calculated based on the outstanding principal balances, without indexation and paid in cash by the Government to Bank Indonesia semi-annually on June 1 and December 1. The first payment was settled on December 1, 2006 to settle interest due on June 1, 2006 and December 1, 2006.

(2) Principal repayment is divided into 32 installments. The first installment is due on June 1, 2010, the next installments will be due on December 1 and June 1 each year until the final installment is due on December 1, 2025. Principal repayment may be settled in form of cash or marketable treasury bonds.

This amendment of SU-004 is part of the Agreement between the Minister of Finance and the Governor of Bank Indonesia dated April 18, 2006 regarding the Restructurization of Government Bond Number SU-002/MK/1998 and SU-004/MK/1999, that was supported by Commission XI of the DPR-RI in the work meeting between Commission XI DPR-RI with the Minister of Finance and the Governor of Bank Indonesia dated October 11, 2006.

Based on Act No. 41 of 2008 dated November 10, 2008 concerning Government Income and Expenditure Budget for the year 2009, the Minister of Finance has issued the fifth addendum of SU-004 that amends the interest rate from 3% to 0.1% per annum and has been effective since January 1, 2009.

c) SUP Number SU-005/MK/1999 (SU-005)

In order to finance the credit program, the Government has issued SU-005 on December 29, 1999 amounted to IDR9,970,000 million.

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24

Indonesia - KLBI) that has been realized by the implementing banks which was due within 2000-2001 period, and has been repaid to Bank Indonesia amounted to IDR3,097,979 million. Up to the final SU-005 withdrawal time limit dated November 10, 2007, the Government has withdrawn the fund amounted to IDR3,046,481 million.

As stated in Minister of Finance letter Number S-270/MK.06/2004 dated August 18, 2004, the terms and conditions of the bond has been amended as follows:

(1) Interest arising from Bond Number SU-005/MK/1999 is calculated based on the realized principal that is paid semi-annually. The interest is calculated using 3 - month term SBI that is periodically adjusted.

(2) The Bond has a 10-year maturity period with a 7 year and 6 month grace period.

(3) The principal will be settled in 2 years 6 months with 5 pro-rate principal installments, and will be paid semi-annually on June 10 and December 10. The first installment was settled on December 10, 2007 and the final installment will be settled on December 10, 2009.

On December 10, 2008, the Government has paid the third installment of SU-005 amounted to IDR609,296 million resulting in an outstanding amount at December 31, 2008 of IDR1,218,592 million.

d) SUP Number SU-007/MK/2006 (SU-007)

SU-007 was issued on November 24, 2006 based on Act of the Republic of Indonesia Number 24 of 2002 concerning Government Bonds and the Agreement between the Minister of Finance and the Governor of Bank Indonesia dated April 18, 2006 concerning Restructurization of Government Bond Number SU-002/MK/1998 and SU-004/MK/1999.

The nominal value of SU-007 is IDR54,862,150 million and is non-tradable. SU-007 was issued to substitute the interest and indexation claim of SU-002 and SU-004 until December 31, 2005, with details as follows:

(1) SU-002 interest claim amounted to IDR4,637,583 million. (2) SU-004 interest claim amounted to IDR12,291,887 million. (3) SU-002 indexation claim amounted to IDR11,231,072million. (4) SU-004 indexation claim amounted to IDR26,701,608 million. The terms and conditions of SU-007 are:

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25

(2) SU-007 interest rate is 0.1% per annum calculated based on the remaining principal balances, and paid in cash by the Government to Bank Indonesia semi-annually on February 1 and August 1. The first interest payment was settled on December 1, 2006 to pay for interest due on February 1, 2006 and August 1, 2006.

(3) Principal repayment is divided into 38 installments. The first installment is due on February 1, 2007, the next installments will be due on August 1 and February 1 each year until the final installment is due on August 1, 2025. Principal repayment may be settled in form of cash or marketable treasury bonds.

On February 1, 2008, the Government has paid the third installment of SU-007 amounted to IDR561,561 million resulting in an outstanding amount as at February 1, 2008 decreased to IDR53,256,417 million. Subsequently, as stated in Minister of Finance Letter No. S-33/MK.8/2008 dated April 10, 2008 and No. S-344/MK.08/2008 dated July 10, 2008 and Bank Indonesia Letter No. 10/12/DpG/DKBU dated September 23, 2008, the installment paid on February 1, 2008 was exchanged as SU-005 installment that was due on December 10, 2008 resulting in the outstanding principal of SU-007 as at December 2008 to return to the previous amount of IDR53,817,977 million. This was followed up by the Minister of Finance by issuing the fourth addendum of SU-007 dated December 24, 2008.

2) Treasury Bond (ON) Number SRBI-01/MK/2003

ON was issued as the substitute for SUP Number 001/MK/1998 and SU-003/MK/1999 in relation to the implementation of Agreement between the Government and Bank Indonesia concerning the Settlement of BLBI and the Financial Relationship between the Government and Bank Indonesia dated August 1, 2003. The nominal value of the Bond is IDR129,344,302 million.

The terms and conditions of ON are as follows:

a) ON became effective on August 1, 2003, without indexation, has a 30-year maturity period and is extendable.

b) Interest on ON is 0,1% per annum calculated based on the remaining principal balances, which will be paid by the Government semi-annually on February and August.

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26

surplus of Bank Indonesia that is accruing to the Government, Treasury Bond will be stated settled and will be revoked.

ON has been amended twice, with details as follows:

a) First amendment of ON by Minister of Finance Letter Number S-10/MK.8/2006 dated December 19, 2006 due to principal payment of 2006 amounted IDR1,522,471 million from Bank Indonesia’s surplus for the year 2005 accrued to the Government. The remaining principal of ON SRBI-01 was IDR143,013,623 million.

b) Second amendment of ON by Minister of Finance Letter Number S-68/MK.8/2007 dated May 15, 2007 due to principal payment of 2007 amounted IDR13,669,321 million from Bank Indonesia’s surplus for the year 2006 accrued to the Government, resulting the outstanding position as at December 31, 2007 of IDR129,344,302 million.

3) Other Claims on Government in Rupiah

- Claims due to Government membership

in international institutions 2,826,956 2,826,956

- Claims due to loan interests 2,697,772 1,931,761

- Other claims in Rupiah 18,781 9,774

5,543,509 4,768,491

Other than claims due to loan interests, other claims on Government in Rupiah were claims effective before the enactment of Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004, with details as follows:

a) Claims due to Government membership in International Institutions amounted to IDR2,826,956 million, consisted of IMF membership fee amounted to IDR2,764,861 million, membership in IBRD amounted to IDR57,434 million and other memberships amounted to IDR4,661 million. Subsequent resolution of those claims is currently being discussed between Bank Indonesia and the Ministry of Finance.

b) Claims due to loan interest amounted to IDR2,697,772 million, consisted of: - Interest claim of SU-002, SU-004, SU-005 and SU-007 amounted to

IDR2,090,098 million.

As stated in Minister of Finance Letter No. S-33/MK.8/2008 dated April 10, 2008 and No. S-344/MK.08/2008 dated July 10, 2008 and Bank Indonesia Letter No. 10/12/DpG/DKBU dated September 23, 2008, the payment of interest for SU-002, SU-004, and SU-007 due in 2008 is postponed and will be paid in 2009;

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27

- Claim due to subsidy of credit program interest rate amounted to IDR553,898 million. The amount decreased due to payment of accrued Subsidy of Credit Program Interest Rate by the Government for the period of 1998/1999 to 2002 amounted to IDR1,070,599 million as stated in Minister of Finance Letter No. S-634/MK.05/2008 dated November 20, 2008.

c) Other claims in Rupiah amounted to IDR18,781 million consisted of claim on Government due to the commercial loan restructuring amounted to IDR18,589 million which is in the settlement process with the Government and other claims amounted to IDR192 million.

b. Claims on Government in Foreign Currency

Claims on Government in Foreign Currency consisted of claims that were effective before the enactment of Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004. These claims were due to the commercial loan restructurization amounted to USD2,917,495.37 or equivalent to IDR31,947 million as at December 31, 2008 and equivalent to IDR27,480 million as at December 31, 2007. These claims are in the settlement process between the Government and Bank Indonesia.

10. Claims on Banks

Claims on banks in Rupiah as at December 31, 2008 and December 31, 2007 amounted to IDR11,978,714 million and IDR12,318,440 million respectively, with details as follows:

- Subordinated loans (SOL) 3,945,691 4,082,378

- Bank Indonesia Liquidity Credit (KLBI) 1,958,422 2,842,119

- Short Term Funding Facility (FPJP) 689,394 0

- Two Step Loans (TSL) 13,522 14,649

- Claims of interest for SOL and KLBI 49,437 57,046

- Other claims of interest 5,322,248 5,322,248

11,978,714 12,318,440

- Subordinated loans 0.20% - 13.00% 0.20% - 10.00%

- Bank Indonesia Liquidity Credit 0.00% - 20.00% 0.00% - 20.00%

- Two Step Loans (TSL) 9.5% 7.8333%

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28

Savings Guarantee Institution (Lembaga Penjamin Simpanan – LPS). That FPJP has been redeemed on February 11, 2009.

Interest claims of Debit Balance Facility (Fasilitas Saldo Debet – FSD) to three taken-over banks (BTO) were given in 1998. FSD principal claims had been transferred to IBRA by assignment of contract rights certificate in 1999. The interest claims of FSD had not been transferred to IBRA, however IBRA had calculated these claims upon recapitalization process of BTO. Bank Indonesia has proposed confirmation to the Government regarding the settlement of the interest claims of FSD, the most current letter No. 10/15/DpG/DKBU dated December 12, 2008, but as at December 31, 2008 there has not been any response.

Bank Indonesia has adequately anticipated the estimated loss of the claims.

11. Claims on Others

Claims on others as at December 31, 2008 and December 31, 2007 respectively were IDR8,798,222 million and IDR10,492,670 million, with details as follows:

- Claim on Others in Rupiah 8,798,222 9,376,012

- Claim on Others in Foreign Currency 0 1,116,658

Total 8,798,222 10,492,670

a. Claim on Others in Rupiah

Claims on others as at December 31, 2008 and December 31, 2007 respectively were IDR8,798,222 million and IDR9,376,012 million, with details as follows:

- Debit Balance of BBO/BBKU 0 41,130

- Claims on appointed State-Owned

Enterprises due to credit program hand-over 2,560,594 2,524,662

- Claims on channeling loan 5,829,957 5,840,134

- Other claims 407,671 970,086

Total 8,798,222 9,376,012

Included in claims on channeling loan was KUT in arrears amounted to IDR5,709,602 million. Settlement of this claim is still waiting for the result of risk sharing discussion with the Government.

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29

December 23, 2008 considering the revocation and liquidation of the banks’ (BBO-BBKU) business licenses by IBRA in 2004.

Bank Indonesia has adequately anticipated the estimated loss of claims due to the interest of FSD and KUT in arrears.

b. Claim on Others in Foreign Currency

Claims on others in foreign currency as at December 31, 2008 was zero and at December 31, 2007 amounted to USD118,553,762.49 or equivalent to IDR1,116,658 million. In accordance with Board of Governor Meeting decision dated December 23, 2008, BI has written-off claims of export notes from one of the ex-Bank in Liquidation amounted to USD118,553,762.49, including USD112,7 million that has been transferred to the Government (Ministry of Finance) through Bank Indonesia Letter Numbered 10/1/DpG/UKPA dated February 29, 2008 based on Board of Governor Meeting decision dated September 18, 2007.

12. Equity Participation

Bank Indonesia holds several equity participations in banks and other financial institutions, with details as follows:

Percentage

- Bank for International Settlements (BIS) - PT. Asuransi Kredit Indonesia

0.55 - PT. Bahana Pembinaan Usaha Indonesia

(BPUI) 82.22 0 82.22 0

932,753 894,711

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30

b. In order to comply with Act of the Republic of Indonesia Number 23 of 1999 concerning Bank Indonesia as amended by Act of the Republic of Indonesia Number 3 of 2004, Bank Indonesia has performed several efforts to divest all equity participation in banks and financial institutions that had been acquired before the enactment of the regulation.

The progress of the divestment up to December 31, 2008 is as follows: 1) N.V. De Indonesische Overzeese Bank (Indover Bank)

The divestment process of Indover Bank to one of Indonesia’s State-Owned Banks could not be continued because the bank resigned as preferred bidder of Indover Bank in September 2008. This resignation was caused by the global financial market turbulence. On the other hand, the financial market turbulence has also caused the freezing of Indover Bank’s operational activities by the Netherland courts on October 6, 2008, which led to Indover Bank being declared bankrupt by the Netherland courts on December 1, 2008. The settlement of Indover Bank will be done by a trustee appointed by the Amsterdam courts (press release Stibbe dated December 1, 2008). The equity participation in Indover bank as at December 31, 2008 was zero, because Indover Bank’s equity had a negative balance. For the explanation of Bank Indonesia’s placement of funds in Indover Bank and the liquidation process of Indover Bank please see Note C.13 – Other Assets and Note D.3 – Commitments and Contingencies. 2) PT Asuransi Kredit Indonesia (Askrindo)

Bank Indonesia’s equity participation in Askrindo has decreased from 55.00% in 2007 to 17.60% in 2008, due to the addition of the Government’s equity participation (Penyertaan Modal Negara – PMN) in Askrindo amounted to IDR850,000 million. With this PMN, the paid-in capital has increased to IDR1,250,000 million, with the composition as follows:

- Government c.q. Ministry of Finance IDR1,030,000 million (82.40%) - Bank Indonesia IDR220,000 million (17.60%) 3) PT. Bahana Pembinaan Usaha Indonesia (BPUI)

The beginning balance of Bank Indonesia’s equity participation in BPUI amounted to IDR18,500 million with total ownership of 82.22%. The value of Bank Indonesia’s equity participation as at December 31, 2008 was zero because BPUI has negative equity value.

Concerning AIA’s option towards 40% ownership of BPUI, Bank Indonesia has negotiated with PT. AIA to return the funds to PT. AIA by requesting a meeting with PT AIA through the mass media 3 times with no response. Bank Indonesia has taken legal action by filing a lawsuit against AIA and is now in court.

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The divestment of Bank Indonesia’s equity participation in PT Askrindo and BPUI will be performed in accordance with the Agreement between Bank Indonesia, the Ministry of Finance, and the Ministry of State-Owned Enterprises dated September 24, 2008.

13.Other Assets

Other Assets consists of Fixed Assets, Financial-Leased Assets, Intangible Assets, Other Assets in IPBV, Currency Inventory and Currency Procurement Advances, and Other Assets.

The balances of Other Assets as at December 31, 2008 and December 31, 2007 were IDR9,194,090 million and IDR7,690,761 million respectively with details as follows:

- Fixed Assets, Financial-Leased Assets,

and Intangible Assets (Book value) 6,589,294 6,566,744

- Other Assets in IPBV 438,031 493,996

- Currency Inventory and Currency Procurement Advances

415,999 440,802

- Other assets 1,750,766 189,219

9,194,090 7,690,761

a. Fixed assets, Financial-Leased Assets and Intangible Assets

The book value of fixed assets, financial-leased assets and intangible assets as at December 31, 2008 and December 31, 2007 were IDR6,589,294 million and IDR6,566,744 million respectively with details as follows:

Cost of Fixed Assets

- Land and Building - Non Land and Building Intangible Assets

Intangible Assets 8,281 24,800

1,238,335 1,048,812

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32 b. Other Assets in Indo Plus BV (IPBV)

Other Assets in IPBV consists of the non-performing loans (NPL) of ex-Indover Bank that has been transferred to IPBV. The balance of the NPL is stated in a Floating Principal Note (FPN). IPBV issues FPN quarterly to reflect the selling value of the NPL at a certain position. The First FPN was issued on January 26, 2004 and amounted to USD294,232,949.00.

The latest FPN based on IPBV Report was dated September 30, 2008 and amounted to USD38,598,104.78 or equivalent to IDR422,649 million. Other than the FPN value, there were also other claims to IPBV amounting USD1,398,024.92 or equivalent to IDR15,308 million that was being used as allowance for IPBV’s operational expenses and amounting to EUR4,751.16 or equivalent to IDR73 million which are Bank Indonesia’s receivables from recovery that has not been received by Bank Indonesia, maintained by IPBV in Indover Bank.

c. Others

Included in Others is the placement of funds in Indover Bank Amsterdam and Indover Bank Hongkong amounted to USD128,797,259.98 or equivalent to IDR1,410,330 million and EUR4,983,376.69 or equivalent to IDR76,905 million at December 31, 2008, and Other Assets amounted to IDR263,531 million. Indover Bank has been declared bankrupt (Note C.12 – Equity Participation).

14. Allowance for Bad Debts

Total allowance for bad debts as at December 31, 2008 and December 31, 2007 were IDR16,474,382 million and IDR17,710,243 million respectively, with details as follows:

- Beginning Balance 17,710,243 31,214,833

- Assets recovery 48 56

- Assets write-off (2,003,061) (13,451,262)

- Addition/(decrease) of allowance for

bad debt 767,152 (53,384)

- Ending Balance 16,474,382 17,710,243

Use of Allowance for Bad Debts was among others for write-off of claims on banks ex-BBO-BBKU as explained in Note. C.11 – Claims on Others.

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33 15. Currency in Circulation

Currency in Circulation is valid payment instrument not under possession of Bank Indonesia with a positionas at December 31, 2008 and December 31, 2007 amounted to IDR264,399,922 million and IDR220,794,779 million respectively with details as follows:

Printed Money: 319,010,796 279,158,691

- Bank Notes

Currency withdrawn from circulation (920,998) (1,834)

Currency inventory (53,673,281) (58,361,352)

Others (16,595) (726)

Currency in circulation 264,399,922 220,794,779

16. Government Demand Deposits

In performing its function as the account holder of the Government, Bank Indonesia manages Government demand deposits, with details as follows:

In Rupiah 32,053,286 11,012,224

In Foreign Currency 65,175,264 10,906,136

97,228,550 21,918,360

a. Government demand deposits in Rupiah as at December 31, 2008 included as follows:

1) General State Treasury (Bendaharawan Umum Negara - BUN) account amounted to IDR26,714,560 million, including sub BUN account for the purpose of guarantee program amounted to IDR83,443 million raised from the issuance of SUP Number SU-004/MK/1999.

2) Government account for accrued interest on subsidy of credit program amounted to IDR1,203,327 million.

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For Government demand deposits, Bank Indonesia has not yet provided interest as stated in Act of Republic of Indonesia Number 1 of 2004 concerning State Treasury, Article 23, paragraph (1), because Bank Indonesia and the Government arestill discussing the issue.

17. Bank Demand Deposits

Bank demand deposits are the balance of demand deposits of commercial banks in order to comply with Minimum Reserve Requirement (Giro Wajib Minimum - GWM). GWM is regulated by Bank Indonesia Regulation Number 10/19/PBI/2008 dated October 14, 2008 concerning Minimum Reserve Requirement of Commercial Banks in Bank Indonesia in Rupiah and Foreign Currency. As stated in Bank Indonesia Regulation Number 10/25/PBI/2008 dated October 23, 2008 concerning the Amendment of Bank Indonesia Regulation Number 10/19/PBI/2008, GWM in Rupiah is determined at 7,5% of Third Party Funds (Dana Pihak Ketiga - DPK) in Rupiah, while GWM in foreign currency at 1% of DPK in foreign currency.

Bank Indonesia provides compensation for the part of the balance of bank demand deposits account in Rupiah that is intended to fulfill the obligation of additional GWM in Rupiah. As of October 24, 2008, as stated in Bank Indonesia Regulation Number 10/25/PBI/2008 dated October 23, 2008, Bank Indonesia does not provide compensation for the balance of bank demand deposits in Rupiah in Bank Indonesia. The obligation to maintain GWM in Rupiah and in foreign currency is also applied to banks that perform their activities based on Sharia Principles (Sharia banks), including banks and the representative offices of banks whose head office is domiciled overseas (foreign banks) that perform their activities based on conventional and Sharia Principles referred to as Sharia Business Units (Unit Usaha Syariah – UUS). According to Bank Indonesia Regulation Number 6/21/2004 dated August 3, 2004 concerning Minimum Reserve Requirement in Rupiah and Foreign Currency for commercial banks that perform their activities based on sharia principles, as amended by Bank Indonesia Regulation Number 10/23/PBI/2008 dated October 16, 2008, GWM in Rupiah for Sharia Banks is determined at 5% of DPK in rupiah and GWM in foreign currency is determined at 1% of DPK in foreign currency. Other than that, for Sharia banks with DPK more than IDR1 trillion and the ratio of funding in Rupiah to DPK in Rupiah is less than 80%, additional GWM in Rupiah is applied at 1%, 2%, and 3%, depending on the amount of DPK of the banks. Bank Indonesia does not provide compensation to the balance of bank demand deposits account of Sharia banks. Bank Demand Deposits as at December 31, 2008 and December 31, 2007 were as follows:

In Rupiah 79,678,015 158,668,351

In Foreign Currency 5,519,062 9,944,049

(40)

35 18. Other Demand Deposits

IMF 1,230,493 1,149,437

IBRD 1,119,637 19,156

ADB 18,987 18,104

Others 652,491 348,649

3,021,608 1,535,346

The IMF Demand Deposit account is used to record quota payment in Rupiah, loan withdrawal in Stand By Arrangement (SBA), Extended Fund Facility (EFF) and New EFF (IMF Account Number 1), as well as administrative transaction account between the Indonesian Government and IMF (IMF Account Number 2).

As a member of IMF, Indonesia is obliged to contribute to reserves set by the IMF in the form of a quota. The amount of the quota is determined by IMF Board of Governors Meeting. The reserves are utilized as fund sources for IMF activities. Indonesia’s total quota as at December 31, 2008 was SDR2,079 million. The accumulated total of the member’s of IMF’s quotas is a source of fund for IMF loan facilities such as SBA, EFF, and Supplemental Reserve Facility (SRF).

The balance of IMF Demand Deposits Account is revalued every April 30 based on the exchange rate at the closing date of IMF. This exchange rate adjustment is allocated to Bank Indonesia and the Government. Bank Indonesia is liable for the exchange rate adjustment for loan withdrawal (IMF Account No. 1), while as the Government is liable for the exchange rate adjustment in relation to the quota payment in Rupiah (IMF Account No. 1) and administrative transaction account between the Indonesian Government and IMF in local currency (IMF Account No. 2). The revaluation that the Government is liable for, if settled by Promissory Note, will add or subtract the balance of the Government’s promissory note administered and kept by Bank Indonesia. The promissory note as at December 31, 2008 amounted to IDR25,766,791 million. In this amount are included quota payments in rupiah and revaluation of Fund’s Securities Account.

19. Bank Indonesia Certificates

(41)

36

Nominal value by period

- 1 month 122,024,993 245,328,400

- 3 months 18,066,000 0

-6 months 37,212,599 0

Less: Un-amortized discount (interest

paid in advance) (1,960,788) (758,244)

175,342,804 244,570,156

SBI discount rate range:

- 1 month 7.93% -11.24% 8.00% -9.75%

- 3 months 7.83% - 11.50% 7.83% - 8.10%

-6 months 9.63% - 12.25%

20. Bank Indonesia Sharia Certificates

Bank Indonesia Sharia Certificates as at December 31, 2008 and December 31, 2007 amounted to IDR2,824,300 million and IDR2,598,500 million respectively, with details as follows:

Nominal Value by period:

- 7 days 0 1,663,000

- 14 days 0 636,000

- 28 days 2,824,300 299,500

2,824,300 2,598,500

SWBI Bonus rates range based on:

- Sharia Inter-bank Money Market 3.70686% - 11.55717%

- Investasi Mudharabah Antar (IMA) Deposit 6.78073% - 8.06887%

1 month BI Sharia Certificate bonus rate range 7.97451% - 11.24053%

21. Bank Indonesia Deposit Facilities