Government’s Debt Reaches Rp7,805.19 Trillion in June 2023, Raising Concerns About the Debt-to-GDP Ratio


As of June 2023, Indonesia’s financial landscape witnessed a notable development as the government’s debt position surged to Rp7,805.19 trillion. This increase has led to a new concern regarding the country’s debt-to-Gross Domestic Product (GDP) ratio, which currently stands at 37.93 percent.

In comparison to the debt position in May 2023, which amounted to Rp7,787.51 trillion, this recent escalation has prompted economists and policymakers to closely monitor the implications on the nation’s economic stability.

In response to the escalating debt, the Ministry of Finance (Kemenkeu) has emphasized its commitment to managing the debt prudently, acknowledging the importance of maintaining controlled risks.

The government’s strategy involves optimizing the composition of the debt, taking into account factors such as currency, interest rates, and maturity periods. By carefully navigating these aspects, the authorities aim to ensure that the debt remains manageable and conducive to the country’s overall economic growth.

It is noteworthy that the majority of the government’s debt is attributed to domestic sources, accounting for 72.49 percent of the total debt. As for the instruments utilized, Government Securities (Surat Berharga Negara/SBN) play a prominent role, making up a substantial 89.04 percent of the debt portfolio. This intricate composition reflects the government’s multifaceted approach to debt management, aiming to strike a balance between local and international resources.

In a recent statement, Kemenkeu officials elaborated on their debt management approach, emphasizing their preference for acquiring debts with medium to long tenors. This strategy enables them to optimize the debt portfolio and mitigate potential risks. Additionally, the ministry is actively involved in the management of the debt portfolio, closely monitoring market trends and seizing opportunities for optimal debt utilization.

Furthermore, the government remains committed to ensuring a stable and secure debt maturity profile. As of June 2023, the average time maturity (ATM) of Indonesia’s debt is approximately 8 years, a relatively safe range that aligns with prudent fiscal practices. This prudent approach has garnered attention and recognition, reflecting positively on the country’s fiscal discipline.

Looking ahead, the Ministry of Finance envisions an efficient and sustainable debt management strategy in the long term. To achieve this vision, the government aims to support the development of a robust domestic SBN market, characterized by depth, activity, and liquidity. This entails fostering an environment conducive to attracting investors and stimulating demand for SBNs.

As part of this comprehensive strategy, Kemenkeu is actively exploring the development of thematic SBNs based on environmental and Sustainable Development Goals (SDGs). Such thematic bonds, including SDG bonds and blue bonds, hold immense potential to attract socially responsible investors and promote sustainable development initiatives.

Despite the positive efforts in debt management and gradual economic recovery, economists and experts acknowledge the challenges posed by the evolving global economic landscape.

Akhmad Akbar Susamto, an economist from the Center of Reform on Economics (Core) Indonesia, asserts that while Indonesia’s debt growth has slowed down, the risk of debt interest payments remains a matter of concern. The fiscal consolidation efforts taken by the government have been commendable, yet the consequences of previous fiscal decisions, especially during the Covid-19 pandemic, continue to exert pressure on the nation’s fiscal health.

To ensure a robust and sustainable economic trajectory, policymakers must remain vigilant in navigating the debt landscape. A prudent fiscal approach, combined with strategic debt management and continuous market development, will be vital in fostering economic growth and stability for Indonesia in the years to come.