The Ministry of Finance (Kemenkeu) has recently published a report on the government’s debt status at the end of May 2023, revealing a total debt of Rp7,787.51 trillion. This amount represents a decrease compared to the previous month’s debt, which stood at Rp7,849.89 trillion. Consequently, the government’s debt-to-GDP ratio has also experienced a decline from 38.15 percent in April 2023 to 37.85 percent.
According to Kemenkeu’s APBN Kita Book June 2023 edition, both the nominal figures and the debt ratio have shown a downward trend compared to the previous month. The decrease in the debt amount can be attributed to financing mutations involving loan instruments and Government Securities (SBN), with debt repayments surpassing the issuance of new debt during May.
Kemenkeu emphasizes that the government’s debt-to-GDP ratio by the end of May 2023 is within a safe threshold and remains significantly below 60 percent of the country’s GDP. This level aligns with the medium-term debt management strategy outlined for the period of 2023-2026, targeting a range of 40 percent.
An analysis of the debt composition reveals that the majority of the government’s debt, comprising 72.15 percent, stems from domestic sources. In terms of instruments, Government Securities (SBN) constitute the predominant form of debt, accounting for 89.04 percent.
Kemenkeu affirms the government’s commitment to prudently manage debt with controlled risks by employing an optimal composition that considers factors such as currency, interest rates, and maturity periods. With a focus on medium to long-term debt procurement, the government is actively involved in monitoring and managing the debt portfolio through May 2023.
The maturity profile of Indonesia’s debt is considered relatively secure, with an average time maturity (ATM) estimated to be around eight years by the end of May 2023, according to Kemenkeu’s report.
To enhance the long-term efficiency of debt management, the government expresses its dedication to supporting the development of a robust domestic market for Government Securities (SBN) that exhibits depth, activity, and liquidity. In pursuit of this objective, the government aims to introduce a range of SBN instruments, including thematic SBNs centered on environmental sustainability (Green Sukuk) and the Sustainable Development Goals (SDG Bond and Blue Bond).
In summary, the latest release by the Ministry of Finance reveals a decrease in the government’s debt position, accompanied by a reduced debt-to-GDP ratio. The report underscores the government’s commitment to prudent debt management and its proactive measures to support the development of a dynamic domestic debt market.