America Cancels Default, Debt Negotiations Meet Lightpoint

JAKARTA - The United States (US) government through President Joe Biden revealed that he had reached an agreement with US House Speaker Kevin McCarthy regarding the negotiation of state debt.

According to him, the DPR agreed to open a debt ceiling (debt ceiling) to avoid the risk of default.

"We agreed to suspend the debt ceiling of 31.4 billion US dollars until March 1, 2025," President Biden said as quoted by Antara on Monday, May 29.

Prior to that, US Treasury Secretary Janet Yellen stated that the government extended the deadline for defaulting on American debt from June 1, 2023 to June 5, 2023.

It is intended to give the White House and Congress more time to be able to open the current debt story.

"Based on the latest available data, we now estimate that the state treasury (Treasury) will not have sufficient resources to fulfill government obligations if Congress does not raise or suspend debt limits by June 5 at a later date," Yellen said.

Meanwhile, in Indonesia itself, Minister of Finance Sri Mulyani emphasized that the situation in the superpower is more about the ongoing political dynamics. In fact, she believes that the US is able to fulfill this obligation.

"That's the real political dynamics. America can pay off its debt if its debt tilting (loan ceiling) is opened. But to open a debt trafficking, it needs a political process," he said.

The Minister of Finance ensured that the US economic condition did not provide negative excesses for productive activities in the country.

"Until now, if we look at there is no influence on the Indonesian economy, especially markets that have not given a signal," he asserted.

Similarly, the Governor of Bank Indonesia (BI) Perry Warjiyo expressed the same optimism. In fact, the BI boss assessed that Indonesia had its own advantage of the uncertainty of the global financial market which remained high.

"Amid the uncertainty of the global financial market, foreign capital inflows to developing countries continue along with the better conditions and economic prospects," he said.

This indication is reflected in portfolio investment, which until May 23, 2023 recorded net inflows of US$1.0 billion.

"Bank Indonesia continues to strengthen synergies with the Financial System Stability Committee (KSSK) in mitigating various domestic and global economic risks, which can disrupt financial system resilience," he explained.