In a recent press conference, Indonesian Finance Minister Sri Mulyani stated that the potential US default crisis has not yet impacted Indonesia’s economy, as reflected by the country’s continued interest in government bonds.
“Until now, that development (potential us default crisis) has no impact on our economy, especially the market has not given any signal to the possibility of political dynamics,” said Sri Mulyani.
The US government’s debt has reached a record-high of $31 trillion, which is a result of the pandemic-induced stimulus package. This has put the country at risk of default if the debt ceiling is not raised. Sri Mulyani notes that while the US can still pay if the debt ceiling is opened, there is political tension around the issue.
Despite the uncertainty surrounding the US debt, Sri Mulyani assures that the Indonesian government is committed to strengthening coordination and maintaining vigilance against global risks. This includes monitoring the performance of government bonds and foreign capital inflows.
The decrease in yield for Indonesian government bonds over the past year has been a positive indicator of the strength of the country’s debt. This has also led to an influx of foreign investment, which has strengthened the value of the Indonesian rupiah.
Furthermore, the country’s strong economic performance, with growth at 5.03% in Q1 2023, has boosted investor sentiment and improved the country’s credit default swap (CDS) risk.
In summary, Sri Mulyani’s statement highlights the current situation of the US debt crisis and how it has not yet impacted Indonesia’s economy.
Despite the uncertainty, the country’s government is committed to maintaining stability and continuing to attract foreign investment through the strength of its government bonds and favorable economic performance.