Jakarta, July 21 (Antara) - Indonesia's rising foreign debts should not be a cause for concern as far as they are managed well and are used for developing infrastructures which will help boost the country's economic growth.
Indonesia's foreign debts rose 5.5 percent to US$333.6 billion year-on-year as of May 2017 following an 11.8 percent rise in public debts to US$168.4 billion, according to Indonesia's central bank (Bank Indonesia/BI).
"As long as the government is carrying out budget expansion for infrastructure development and its debt ratio is not too high, we will remain sustainable," Chief Economic Minister Darmin Nasution told Commission XI on financial affairs of the House of Representatives (DPR) Monday last.
Finance Minister Sri Mulyani also described Indonesia's debts as still within the safety condition where in 2016 Indonesia's external debt ratio position was 28 percent of its Gross Domestic Product (GDP) or about Rp3,466 trillion (some $258.9 billion based on the conversion rate of Rp13,387/$1).
"The Indonesian debt ratio is relatively lower than those of other G20 countries ASEAN member nations," Mulyani told a plenary session on the implementation of 2016 state budget at the Parliament Tuesday (July 18).
Malaysia's debt ratio is 53.2 percent and Thailand 44.4 percent of their GDP, she said.
The same view was also expressed by Chief Economic Minister Darmin Nasution, who said Indonesia's external debt ratio is still safe and smaller than other developing countries, namely below 30 percent.
Indonesia needs foreign debts to finance its development, particularly infrastructure. The Indonesian government can just adopt safer policy in its budget management, by not taking more foreign loans, yet it could hamper development as it would constrain the procurement of infrastructure facilities, Nasution said.
The government has projected investments of Rp4,000 trillion until 2019 on infrastructure projects. Of this, the private sector is expected to invest about two-thirds or Rp2,667 trillion while the government will invest the remaining Rp1,333 trillion.
Infrastructure projects, especially ones related directly to the public interest such as toll roads, airports and seaports are badly needed.
"If we want to become safe, the choice is not to increase debts as it would slow infrastructure development. We are lagging far behind others in terms of infrastructure. If it is not built we will never come closer to them (developed countries). We have been left too far behind in this sector," Nasution said.
Yet, the government is starting to also reduce its depend on debts for development financing by inviting the private sector to develop strategic infrastructure projects, he said. Infrastructure projects, especially ones related directly to the public interest such as toll roads, airports and seaports, are highly attractive for the private sector. Toll road projects in Java are almost certain to be profitable.
"We can attract numerous private businesses to be involved in the infrastructure development, though it cannot be realized at a fast pace," he said.
Projects can be offered through a Non-Budgetary Investment Financing Scheme (PINA) now being promoted by the National Development Planning Agency (Bappenas). Among the projects now being supported by the PINA scheme include the Trans-Java Toll Road.
The government always pays attention to the sustainability of the state budget and its ability to pay debts. The government tries its best to use debts only to fund productive programs which would create resources for state receipts, according to Finance Minister Sri Mulyani.
"Deficit and additional debts must be able to generate an increase in the people's income, such as in the construction of infrastructures, poverty reduction, health improvement and quality education," Sri Mulyani remarked.
Thus, deficit would not trigger confidence crisis and debts would remain to be manageable at the safety level based on the ability to make debt repayment.
Meanwhile, Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan said Indonesia's state debt is relatively small as compared to other G20 member countries.
In his keynote speech during the opening of the 2017 National Technology Congress in Jakarta, Monday, the coordinating minister stated that based on the International Monetary Fund's data, among the 20 countries, with the world's largest economies, Japan has the highest ratio of debt to the gross domestic product (GDP), reaching up to 238 percent.
"Our debt is still considerably very small as compared to other countries since it is under 30 percent, 27.9 percent to be precise, of our GDP," he noted.
Indonesia can, in fact, also continue to owe up to 60 percent of the GDP in accordance with the existing laws, but it is not being carried out, he pointed out.
The government needs to ensure that loans are of positive value by turning them into productive capital, he then asserted.
All loans taken by the country have good prospects and value, Panjaitan, who is a former coordinating minister for political, legal, and security affairs, claimed, as he also laid emphasis on the fact that taking debt is a normal procedure in the process of development, as the state budget cannot always fund the entire project.
"The question then comes down to whether the debt is necessary. If you are a seller, then let me ask you, can it all be equity? Of course not, there needs to be loads. Now, it is a matter of how we turn the loan to be as productive as possible," he added.
***3***(a014/INE)EDITED BY INE/H-YH |
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