Jakarta, March 30 (Antara) - If compared with that in 1998, which reached US$130 billion, the government's external debt now is far larger, as it accounts for $357.5 billion.
Yet, the government claimed it is manageable and productive, as the country's foreign exchange reserves (forex) in 1998 were only $20 billion, or about 15 percent of the debt, while in 2018 the amount of the forex reached $131 billion, or almost 35 percent of the external debt.
Indonesia's gross domestic product in 2018 reached almost $1 trillion, while its debts only accounts for 35 percent of the GDP, which is still below the tolerance 60 percent, limit based on the country's financial law. Indonesia shares the same level as those of Brazil and Thailand, but is far worse than those of the United States, which reaches 106 percent, and Japan at 250 percent.
However, seeing the large amount of the government's external debts, Deputy chairman of the People's Consultative Assembly (MPR) Hidayat Nur Wahid has asked the government to evaluate the use of its debts.
According to Wahid, the increase in debts was not proportional with the improvement of the people's welfare. "The question asked is what has the debt been used for? Debt has continued to increase, but there is no improvement in the people's welfare. The government has to evaluate this," Wahid said in the district of Padang Pariaman, West Sumatra, on Sunday (March 25).
He said that according to the Institute for Development of Economics and Finance (Indef), the country has debt of some Rp7,000 trillion, including private sector debt.
The large debt has offered no benefits to the people and unemployment remains high, he said.
According to Indef, the government's debt, which has continued to increase since 2015, is showing counterproductive tendencies. "The debt that has been increasing over the last three years tends to be counterproductive. The real sectors that should be receiving better are worsening," Indef Executive Director Enny Sri Hartati told a press conference at Indef's Jakarta office on Wednesday (March 21).
She noted that there is still an anomaly or deviation from the hope of the government to accelerate national productivity and competitiveness, including increasing self-efficiency as a nation. "Import dependence has even begun to increase in the staple food sector," said Hartati.
On the same occasion, Indef researcher Riza Annisa Pujarama said that government debt increased since 2015. Government debt is claimed to be used to finance infrastructure development.
Government debt jumped from Rp3,165.13 trillion (2015) to Rp3,466.96 trillion (2017). At the end of February 2018, central government debt amounted to Rp4,034.8 trillion.
"Government debt increases in line with spending. Structurally, the central government's spending has not changed much in capital expenditures. What is increasing is spending on personnel, goods expenditures and debt service payments," she said.
Pujarama also highlighted the central government's expenditures, which are supported by the issuance of Government Securities (SBN) with a high percentage of foreign ownership. This needs to be wary of generating capital outflow (capital outflow).
"SBN ownership is owned by many foreigners, and there is a danger, especially when the rupiah is depreciating," she said.
Based on the Ministry of Finance records, as of the end of February 2018 most government debt remained dominated by SBN issuances, reaching Rp3,257.26 trillion or 80.73 percent of total government debt.
SBN issued some Rp2,359.47 trillion, or 62.62 percent issued in rupiah denomination, and Rp897.78 trillion or 18.11 percent in foreign currency denominations.
In the meantime, Finance Minister Sri Mulyani Indrawati said the increase in the nominal value of debts is not necessarily equivalent to capital or infrastructure spending.
"The statement that 'additional debt was not productive as it is not followed with equal amounts for capital spending' is a, incorrect conclusion," Sri Mulyani said.
Mulyani said that the government's debts are used prudently, in line with the principles of good budget management. "To those who have called on the government to be careful in using debt, I can assure that their demand has been what the government has always done," she said, in a press statement received on Friday evening, March 23.
She added that debt was used as part of the management of budgets in stages and very carefully, to prevent possible shock on the economic engine that may slow it down.
Debts and tax revenues are fiscal policy instruments used by the government to improve infrastructure, education, health or social security, she noted.
She further said there is nothing to worry about, with regard to current debt, because it is well managed to assure it remains below the level allowed by the law.
In the 2018 state budget, capital spending accounted for 25 percent of the total transfers of Rp766.2 trillion to the regions, and capital spending was not the only fund for infrastructure spending, she said.
"Good economists know very well that the quality of good, efficient, and clean institutions is the type of 'soft infrastructure' which is vital for the advancement of an economy," she added.
The Minister said a disciplined fiscal policy, which has been consistently adopted by the government, does not mean that the government is against using debt.
Sri Mulyani said the government has adopted a disciplined fiscal policy to assure that the debt ratio to the GDP remains within the limit allowed by the law.
"Indonesia is among those countries having laws on fiscal discipline overseeing the implementation of the state budget and has been consistent in its execution," she said.
The government's consistency in adopting fiscal discipline is obvious from the decline in state bond yields, from 7.93 percent in December 2016 to 6.63 percent in mid-March 2018 for 10-year bonds.***3***(A014/INE)(T.A014/A/BESSR/A. Abdussalam) 30-03-2018 22:14 |
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