Jakarta, April 7 (Antara) - Media reports cited that the government's debt until the end of February 2018 reached Rp4,034.8 trillion, and if the private sector's debt was taken into account, the figure amounted to Rp7 thousand trillion.
Quoting data from the Institute for Development of Economics and Finance (Indef), Deputy Chairman of the People's Consultative Assembly Hidayat Nur Wahid remarked that the country had debt reaching some Rp7 thousand trillion, including the private sector's debt.
Wahid believes that the increase in debts was not proportional with the improvement in 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 noted in the district of Padang Pariaman, West Sumatra, on Sunday (Mar 25).
Hence, Enny Sri Hartati, the executive director of Indef, has called on the government to improve its debt management to reinforce its economic productivity.
"While looking at the effectiveness of debt, we measure its productivity. We do not measure assets, but the development outcome of debt financing, whether the debt adds to our productivity," Hartati noted at a discussion on debt in Jakarta on Tuesday (Apr 3).
According to Hartati, if debt management is still in shambles, continued increase in financing for development with debt is not appropriate, as the debt will continue to grow.
It is evaluating the debt that has soared over the past few years and whether it can support productivity and competitiveness through various fiscal stimulus packages issued by the government.
The Indef executive director reminded the government that it should be in debt to catch up with infrastructure development, but adversely the biggest benefits of debts were used for paying salaries of civil servants and the interest of the debt itself as well as for goods expenditure.
Infrastructure is currently being built, but state-owned enterprises should be asked whether the financing of the infrastructure they build comes from the debt being managed by the government or whether they borrowed from third parties.
Meanwhile, Director of Strategy and Debt Portfolio of the Ministry of Finance Schneider Siahaan remarked that several parties blame debt financing, but the debt is not the ultimate goal.
According to Siahaan, what needs to be known is the financing mechanism to achieve the target through debt allocation for development.
Siahaan explained that the government spending serves as a catalyst to accelerate economic growth and stimulate the private sector as a key driver.
"What I want to say is that we are just smart at the criticism level and not in the solution," he pointed out.
He emphasized that debt management was in accordance with the needs of the state as was reflected in the state budget.
Based on official records of the Finance Ministry, the government debts by the end of February 2018 had reached Rp4,034.8 trillion, or 29.2 percent of the country's gross domestic product (GDP). The debts included Rp3,257.26 trillion in state bonds, or 80.73 percent, and Rp777.54 trillion in loans, or 19 percent.
"In the past, the main sources were loans, and now, it is state securities, as loans have limitations that could not meet our requirements in development," Siahaah noted.
Finance Minister Sri Mulyani had earlier stated 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 ensure that their demand has been what the government has always done," she noted in a press statement received on Friday evening, Mar 23.
She added that the debt was used carefully as part of the management of budgets in stages to prevent possible shock to the economic engine that may slow it down.
According to World Bank's data, the ratio of Singapore's government debt to the country's GDP was 117.2 percent in 2016, while the ratio of the Indonesian government's debt to its GDP is recorded at 31.4 percent in the same year. The maximum limit of the government's debt, as stipulated in State Finance Act Number 17 of 2003, is 60 percent of the GDP.
In the meantime, Director General of Financing and Risk Management of the Finance Ministry Luky Alfirman pointed out that the effectiveness of state debts could be seen from the structure of expenditures.
"What have the expended funds been used for? This should become a reference to gauge the effectiveness of debt. We want to spend the debt in a qualitative and productive manner. We do not want unproductive spending," Alfirman remarked at a media briefing here on Friday (Apr 6).
He explained that efforts to improve the quality of expenditures had been undertaken through a reduction in the fuel subsidy since 2015. The subsidy is considered to be inaccurate, as the recipients are mostly vehicle users.
"The fuel subsidy is also consumptive, as it has to be used in the current year. If debt is used in a consumptive manner, it would become unfair since it is the next generation that will bear it," Alfirman emphasized.
The current government's priority spending is focused on the infrastructure and human resource development sectors. The two priority spending sectors are investment in real terms, as they have a time frame and can produce results that can be enjoyed.
Based on records of the Ministry of Finance, the additional cumulative debt for infrastructure increased from Rp456.1 trillion in the 2012-2014 period to Rp904.6 trillion during the 2015-2017 period.
Of note, the additional cumulative debt for the development of human resources encompassing education, health, and social protection increased from Rp1,164.8 trillion in the 2012-2014 period to Rp1.716.5 trillion during the 2015-2017 period.
"Several purchasing programs cannot be postponed, which is why the 2018 state budget is still at a deficit of Rp325.9 trillion," Alfirman added.***3***
(A014/INE/o001)EDITED BY INE(T.A014/A/BESSR/O. Tamindael) 07-04-2018 13:50 |
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