The government through the Ministry of Finance has announced a remarkable milestone in debt financing, revealing that the realization of debt financing as of April 2023 has reached an impressive Rp243.9 trillion, constituting approximately 35 percent of the State Budget (APBN). The rationale behind this surge in debt issuance, highlighting the need to anticipate potential future interest rate hikes.
This achievement is indicative of the government’s proactive measures to secure adequate funding for the country’s economic growth and welfare improvement. In a year-on-year comparison, this figure reflects a significant increase of 55.9 percent from the corresponding period last year, which recorded a total debt financing of Rp156.4 trillion.
Finance Minister Sri Mulyani Indrawati emphasized the rationale behind this surge in debt issuance, highlighting the need to anticipate potential future interest rate hikes.
She stated during the APBN Kita Press Conference on May 22, 2023, “The increased debt issuance until the end of April amounted to Rp243.9 trillion. This rise can primarily be attributed to our proactive approach in anticipation of potential increases in both the Fed Funds Rate (FFR) and domestic interest rates.”
Delving into the specifics, the breakdown of debt financing reveals that the realization through the issuance of Government Securities (SBN) alone reached an impressive Rp240.0 trillion as of April 2023. This represents a substantial year-on-year growth of 68.8 percent. This signifies the market’s confidence in Indonesian bonds and the government’s ability to attract investors through the issuance of SBN.
On the other hand, the realization of loan disbursement during the same period stood at Rp3.9 trillion, marking a noteworthy decrease of 72.7 percent compared to the corresponding period last year. This decline in loan disbursement is attributed to the government’s prudent approach in managing its debt portfolio and seeking alternative funding sources.
Minister Sri Mulyani further emphasized the importance of effective debt management and strategic timing of debt issuance, whether through SBN or loans. These measures align with the comprehensive financing strategy for 2023. She elaborated, “With our substantial revenue inflows, we have the flexibility to adjust the issuance of SBN according to our favorable financial position in this particular quarter.”
The significant achievement in debt financing underscores the Ministry of Finance’s astute approach in navigating the ever-changing economic landscape. It demonstrates the government’s commitment to maintaining a balanced fiscal stance and ensuring sustainable financial stability for the country’s long-term economic development.
The successful realization of debt financing will contribute to supporting key government initiatives, such as infrastructure development, social programs, and investment promotion, ultimately fostering economic growth and improving the welfare of the Indonesian people.