Indonesia, Sri Mulyani, And The Commitment To Rp6,713 Trillion Debt Payment

JAKARTA – The government through the Ministry of Finance (Kemenkeu) recently released state financial reports which are summarized in the December 2021 edition of our APBN.

The minutes stated that the government's debt status in November 2021 was Rp6,713.24 trillion. This rate increased by 25.96 trillion compared to the October 2021 period which was 6,687.28 trillion.

In detail, the debt in November 2021 consisted of Rp832.51 trillion in loans and Rp5,889.73 trillion in state securities (SBN).

Meanwhile, SBN is divided into two categories, namely SBN released in the domestic market of Rp4,614.96 trillion and SBN in foreign currency (foreign currency) of Rp1,274.77 trillion.

In terms of ratios, Indonesia's latest debt position is known to be 39.84 percent of gross domestic product (GDP). This percentage is still quite wide from the provisions of the Indonesian constitution which stipulates a maximum limit of 60 percent of GDP.

In fact, the government debt is increasing in line with the need for funds to handle the COVID-19 pandemic.

However, the Minister of Finance (Menkeu) Sri Mulyani emphasized that Indonesia still has the ability to pay off debt. He emphasized this when he made a working visit to East Kalimantan in the middle of this week.

"If we have good spending, good infrastructure, quality human resources, this will make Indonesia grow. And if it is achieved, then surely we can pay again. God willing, come back safely. That is what is included in the state's financial planning," he said.

Cancel withdrawal of Rp310 trillion debt

According to VOI's records, the steady performance of the 2021 State Budget saved Indonesia from adding a new debt burden throughout last year. This was revealed when the Minister of Finance held a press conference on the realization of the 2021 State Budget in Jakarta earlier this week.

It is stated that the debt financing ceiling in 2021 is Rp1,177.4 trillion. However, the government only made debt withdrawals of Rp867.4 trillion or 73.7 percent of the planned.

"We see debt financing at Rp310 trillion less," said Sri Mulyani.

This condition cannot be separated from the state revenue sector, which amounted to Rp2,003 trillion, or jumped 114.9 percent of the APBN target of Rp1,743.6 trillion.

This achievement made the budget deficit smaller from the previously estimated Rp1,006,4 trillion to Rp868.6 trillion at the end of December 2021.

Faisal Basri reminds interest expense

Senior economist Faisal Basri admits that Indonesia's debt ratio to GDP is still lower than a number of friendly countries, take Singapore as an example.

According to his records, Indonesia's debt is 40 percent of GDP and Singapore's debt is 100 percent of its GDP. However, Faisal said there is one key thing that the government has rarely published.

"Singapore even though its debt burden is 100 percent of GDP, the interest expense is only 1 percent of state revenue, while Indonesia has 20 percent (of state revenue) for next year (2022)," he said as reported by the editorial on December 27, 2021.

The University of Indonesia academician saw the high-interest rate due to Indonesia's strategy in issuing securities with high-interest rates. Different things will be found when compared to the countries in ASEAN.

"We get loans with an average interest rate of 6 percent. If Singapore 0.1 percent. This happens because Indonesia's risk is considered greater than Singapore's, such as political risk, then exchange rate risk, and so on," he explained.

The government recognizes large debt interest

During the Working Meeting of the Budget Agency (Banggar) of the DPR RI with the government in early September 2021, information emerged that Indonesia had paid debt interest of Rp317.89 trillion on loans that reached Rp6,080.08 trillion throughout 2020.

Meanwhile, the state revenue sector in 2020 generated Rp1,633.6 trillion. This means that in the last two years, the government had to fulfill its debt interest payment obligations of 19.46 percent of the total income received.

Through the Special Staff of the Minister of Finance for Strategic Communications Yustinus Prastowo, the government has finally opened up its voice.

"This pandemic is an extraordinary event. Almost all countries face this and take countercyclical policies to maintain the economy and provide stimulus. The implication is that the deficit is widening. But this must be taken for the sake of a greater purpose and interest," he said some time ago.

However, Sri Mulyani's subordinates still believe that what the government is doing is still on a safe path.

"In 2020, the government has managed APBN financing with extraordinary policies that keep financing in safe conditions. Even efforts to reduce the cost of debt are carried out in various ways, such as burden sharing with BI, converting foreign loans with interest rates close to 0 percent, and reducing yields to 5.85 percent," he explained.