The world situation that continues to heat up due to several international events has had a bad impacts on developing countries. Despite being affected, Indonesia, fortunately, was still able to survive well when other countries faced bankruptcy. This is evidenced by the international rating agency Fitch which still maintains Indonesia’s Sovereign Credit Rating at BBB (investment grade) with a stable outlook. Moreover, it is supported by good fiscal management amid efforts to stimulate the economy.
Based on Fitch’s report, Wednesday (29/6), they estimate that the Indonesian economy can accelerate to 5.6% in 2022 and 5.8% in the following year.
This good prediction was supported by the controlled spread of COVID-19 cases and increased exports due to the surge in international commodity prices.
“Indonesia’s exports rose 43% in the 12 months to May 2022 from a year earlier. However, risks to growth remain, stemming from global inflationary pressures and the potential for slower growth, including in China, and faster-than-expected monetary tightening. right now,” Fitch wrote.
Furthermore, Fitch praised the government for fiscal management. This is because it can drastically reduce the budget deficit, which is estimated to reach 4.3% of GDP in 2022 or below the government’s estimate of 4.5% of GDP.
This is in line with the government’s desire to re-position the budget deficit to a level below 3% of GDP in 2023. Likewise, the debt ratio continues to shrink. Although it is necessary to be aware of the risk of a very large subsidy burden.
Previously, the Minister of Finance of Indonesia, Sri Mulyani conveyed good news regarding national finance. She explained that Indonesia’s debt continues to shrink amid many countries experiencing bankruptcy.
Furthermore, government debt is also getting healthier due to a decrease in the ratio to gross domestic product.
This is a good achievement because in the future the risk of soaring debt will be very high. The current debt-to-GDP ratio is 39% with a nominal debt of IDR 7,040,32 trillion.
Minister of Finance Sri Mulyani Indrawati at the UI International Conference on G20, quoted Tuesday (21/6/2022), explained, “With the strong acceptance of the commodity boom, our debt-to-GDP ratio has actually fallen by 13%. ”
The Covid-19 pandemic has entered its third year, but many countries are still experiencing very deep deficits. This condition leads to an increase in public debt for the country.
She added, “Some countries’ debt ratios are already above 60% and some are even 80% or even 100% of GDP. So they now have a more dramatic debt-to-GDP ratio, and for low-income and vulnerable countries the situation is unsustainable.”
As previously reported, Bank Indonesia (BI) reported that its external debt was at US$ 409.5 billion in April 2022. Assuming US$ 1 is equivalent to Rp. 14,729, the external debt value is Rp. 6,031.52 trillion.
The debt in April decreased compared to March which was recorded at US$ 412.1 billion (Rp 6,069.82 trillion). On an annual basis, the position of external debt in April 2022 contracted 2.2% (YoY), deeper than the contraction in the previous month of 1% (YoY).