Sri Mulyani's Subordinates Bring Good News: Four Countries Write Off Indonesia's Debt, Totaling IDR 5 Trillion

Indonesia's debt illustration (Photo: Doc. Antara)

YOGYAKARTA – Good news came from the Special Staff of the Minister of Finance (Menkeu) Yustinus Prastowo.

He reported that four countries had written off Indonesia's debts. The four countries that are committed to eradicating Indonesia's debt are Germany, Italy, Australia, and the United States (US).

The four countries are creditors who provide loan funds for Indonesia.

"Good news! Germany, Italy, the US, and Australia are united in writing off Indonesia's foreign debt of US$334.94 million or equivalent to IDR 5 trillion," Yustinus said in a statement posted on his social media account, Tuesday, October 18.

Debt Swap Scheme

In his statement, Yustinus also explained that the debt write-off was carried out with a conversion scheme or debt swap.

"A total of 4 creditor countries have committed to write off Indonesia's debt through a conversion scheme or debt swap. The agreed debt conversion is in the form of programs/projects that must be implemented by the Indonesian government," he said.

Quoted from Kontan, economist Samuel Aset Manajemen Lana Soelistianingsih said that a debt swap is a debt payment by way of exchange.

Repayment is done without paying money to the creditor country, but payment in other ways.

3) Kembali ke Rp5 triliun tadi, apa itu hasil restrukturisasi? Betul. Sebanyak 4 negara kreditur berkomitmen menghapus utang Indonesia lewat skema konversi atau debt swap. Konversi utang yg disepakati adalah ke dlm bentuk program/proyek yg harus dilaksanakan oleh pemerintah RI.

— Prastowo Yustinus (@prastow) October 17, 2022

Prastowo said that the agreed conversion of debt was in the form of programs/projects that had to be implemented by the Indonesian government.

Debt Payment Method

As mentioned earlier, the payment scheme is carried out through a debt swap scheme, namely by exchange in the form of programs or projects. Each country has a variety of projects, which are as follows.

1. Germany: Indonesia's debts were exchanged for education, education, health and global fund projects.
2. Australia: Payments are made with health-related programs.
3. United States: The proposed program is tropical forest.
4. Italy: Indonesia's debt swap with Italian creditors for housing and settlement projects.

Of the four countries, Indonesia's total debt written off reached US$ 303 million, with the realized nominal amounting to US$ 261 million with 175 projects and programs.

Lucky himself said that debt payments with the same scheme had the opportunity for other countries.

"In the future, Debt Swaps are two-way in nature. If the lenders indicate that they want to do (debt swaps) we are very, very welcome, sometimes we offer them, but it also depends on what kind of lender," he said.

RI debt

The write-off of debt granted to Indonesia certainly has an impact on the amount of Indonesia's international loans.

On the official BI website, it was noted that Indonesia's foreign debt (ULN) as of July 2022 had decreased.

The position of Indonesia's external debt at the end of July was 400.4 billion US dollars. This figure decreased compared to the previous month which was 403.6 billion US dollars.

This development was triggered by a decline in external debt from the public sector (Government and Central Bank) and the private sector.

That is information regarding four countries write off Indonesia's debt. For other interesting information, visit VOI.ID.