Observers Reveal State Debt Is Not Just A Figure, But An Intergenerational Burden

JAKARTA Economic observer from Andalas University Syafruddin Karimi also highlighted the urgency of understanding public debt not only as a figure in state financial reports, but as a social contract that will be inherited across generations.

According to him, when the public heard that Indonesia's total debt had exceeded the figure of thousands of trillions of rupiah, most people only shook slowly, then forgot about it, as if it was just a matter of fiscal technocracy, not a real burden that must be paid in the future.

"In fact, behind these numbers, one fundamental question is hidden that we must think about together: who actually bears the burden of this public debt? The answer is simple as well as complicated: we are all people, now and later," he said in his statement, Saturday, July 5.

According to Syafruddin, state debt is not just a figure in the balance sheet, but a social contract that links the present and future.

Syafruddin said that the debt in modern economic theories is that instruments and countries are in debt not because they don't have money, but as part of a fiscal strategy in encouraging growth, maintaining stability, or tackling crises.

He gave an example such as Japan, the United States, and many other countries living with a high debt ratio without collapsing, because their fiscal system is credible and efficient.

"Indonesia has not escaped. Since the 1997 monetary crisis until the COVID-19 pandemic, public debt has become a vital instrument to avoid economic contraction. The government has financed subsidies, social assistance, mass vaccinations, and the recovery of MSMEs. all financed from debt posts," he explained.

However, according to him, problems arise when debt is no longer directed at productive spending, but after regular shopping is absorbed, bureaucratic swelling, or even leaked by inefficiency and corruption, instead of spurring growth, debt becomes an intergenerational burden.

He added that it is true that the government signed debt securities, but those who pay are people through taxes, hidden inflation, or reduced public spending in other sectors.

"When debt installments and interest costs up to hundreds of trillions of rupiah from the state budget every year, the allocation for education, health, and infrastructure is also eroded," he explained.

Syafruddin explained, based on data from the Ministry of Finance, debt interest payments in 2024 are estimated to reach more than IDR 500 trillion and not including the principal debt that is due.

"The source of the payment? Tax. And when our tax ratio stagnates in the range of 10'11 percent, it means that the burden is divided into a narrow active tax payer group: formal workers, compliant businesses, and consumers who pay VAT," he said.

He said that the younger generation bears more and also chooses to remain silent, even though they not only inherit debt in nominal form, but will also inherit a narrow fiscal structure, increasingly limited public spending, and economic risks inherited from today's decision.

Every deficit today, said Syafruddin, is a future burden and when the APBN is no longer free because half of it is used to pay debts, then fiscal choices are increasingly limited, whether subsidies must be cut, infrastructure development must be postponed or, whether tax rates should be increased.

According to him, if debt is not directed at long-term investments such as education, research, or industrial transformation, then what is inherited is only a burden. Not competitiveness.

"Moreover, the debt used is not always directed at future investments such as education or research. If the development orientation is only short and political, then the debt changes its function from a growing tool to a power survival tool," he said.

Syafruddin emphasized that debt is basically not an enemy, but how to manage it into a growth engine, not a fiscal trap.

"Prone managed with accountability, transparency, and productivity-oriented will expand economic capacity. However, debt that is used without direction, without evaluation, and without intention of building an institution will burden the future," he explained.

In the future, Syafruddin said that the government must talk more than just the ability to pay (solvability) but must show how debt is used to finance the productive sector, build institutions, and increase national economic competitiveness.

"The Ministry of Finance and Bappenas must be more open, and parliament must be sharper in supervision. Do not let the people only be used as objects of debt rhetoric, even though those who bear the long-term effects are them," he added.

In the end, the state debt is not just a fiscal burden but is an intergenerational social contract and today's decision will form future choices.

"Therefore, when we ask, Who bears the burden of public debt? That answer is not an abstract entity called the state, but all of us: the taxpayers today, and our children who will grow in the fiscal structure that we inherit," he said.

"The debt is not to be feared, but to be monitored. Not to be avoided, but to be accounted for. Because in democracy, the state debt is actually the public debt of our shared debt," he added.