Indonesia's Debt Approaches Rp7,000 Trillion Level, Government Promises To Reduce Foreign Loans

Illustration (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) reported that the debt as of September 2021 had reached IDR 6,711.52 trillion. This amount is equivalent to 41.38 percent of gross domestic product (GDP). This is the official government broadcast in the release of our October 2021 edition of the State Budget.

It was stated that the central government's debt position had increased by Rp86.09 trillion when compared to the debt position at the end of September 2021.

“The increase in Indonesia's debt was mainly due to an increase in debt from Domestic Government Securities by Rp. 89.08 trillion, while Government Securities in foreign currencies increased by Rp. 6.2 trillion. Meanwhile, for loans, there was a decrease of Rp. 9.19 trillion,” said a government release quoted by the editorial staff on Friday, November 5.

It is said that in order to maintain prudent, measurable and flexible debt management during the pandemic, several debt management steps have been taken by keeping the composition of domestic SBN debt larger than debt in foreign currency.

"The government has consistently tried to reduce Foreign Loans and SBN in foreign currencies as an effort to reduce foreign exposure to government debt," he said.

Then, the government is trying to claim that it will continue to seek non-debt financing through the use of accumulated cash surpluses (SAL) of Rp169.9 trillion.

"Taking into account the current and future developments in the SBN market conditions, the impact on the supply of SBN in the financial market is estimated to be within reasonable limits and has the potential to decrease from the initial target in line with the improving economy," he said.

Separately, data released by Bank Indonesia (BI) stated that Indonesia's foreign exchange reserves decreased by US$1.4 billion in the past month from US$146.9 billion in September 2021 to US$145.5 billion in October 2021. .

"The decline in the position of foreign exchange reserves in October 2021 was influenced, among other things, by the payment of the government's foreign debt," said Head of the BI Communications Department Erwin Haryono in an official statement, Friday, November 5.

Just so you know, the amount of debt that is close to IDR 7,000 trillion is a new level from the previous IDR 5,000 trillion to IDR 7,000 trillion. The swelling value is considered by state officials to be still quite safe.

This is because the government always refers to the State Finance Law Number 17 of 2003 and the APBN Law which states that the maximum debt limit cannot exceed 60 percent of GDP.