Indonesia’s Debt Ratio Is Relatively Low Compared to Other ASEAN Countries

rupiah IDR

Indonesia’s debt ratio is relatively low compared to other countries. This was confirmed by the Minister of Finance Sri Mulyani Indrawati. She stated that Indonesia’s debt ratio is relatively low when compared to ASEAN countries, the G20, or even the rest of the world.

This relatively small state debt can happen because the government through the Ministry of Finance continues to maintain the consolidation of the State Revenue and Expenditure Budget (APBN) to maintain the health of the State Budget. One of them, the government will put the brakes on debt issuance.

This is done so that the fiscal deficit can return to a safe level, below 3 percent in 2023. By the end of February 2022, the government’s debt position was at Rp. 7,014.58 trillion with a ratio of government debt to Gross Domestic Product (GDP) of 40. ,17 percent.

This position increased when compared to the debt position as of January 31, 2022, which was Rp. 6,919.15 trillion or 39.63 percent of GDP.

Even though Indonesia’s debt ratio is small, it needs to be maintained carefully and prudently.

Sri Mulyani in a press conference on the results of the 2022 KSSK II Periodic Meeting, Wednesday (13/4/2022), said, “We will see in terms of how we maintain it, especially Bank Indonesia’s support for this year through SKB I and III which are still running and also in terms of optimizing both in terms of state spending and in terms of state income which is currently increasing due to increased commodities,”

Furthermore, for the issuance of State Securities (SBN), Sri Mulyani said that with the relatively high state revenues and an excess budget balance (SAL), the government would optimize the remaining budget last year and potentially reduce the deficit.

Sri Mulyani was also invited to look at the global risks due to the normalization of monetary policy, especially from the Fed and also the war in Ukraine, all of which will have the potential to suppress the SBN market in terms of yield and demand for SBN.

She said, “Therefore, in terms of how we plan for financing, first we will reduce the issuance of debt by using SAL at least until this March is a decrease of Rp. 100 trillion,”

Not only that, the government will continue to make adjustments in terms of the number of issuances, the tenor of SBN to be issued, the time of issuance, and also in terms of currency composition.