The Answer Of The Ministry Of Finance Regarding The Limit On The Debt Rate To GDP Is Determined To Be 60 Percent

Ministry of Finance Building (Photo: Doc. Cabinet Secretariat)

The Ministry of Finance (Kemenkeu) provides an explanation regarding the reason the government has set a policy of limiting debt to a maximum of 60 percent of gross domestic product (GDP).

Fiscal Policy Analyst of the Ministry of Finance, Dewi Puspita, said that the strategy is closely related to the state's financial condition which must be properly maintained in balance and health.

"If it's more than 60 percent, how will our ability to pay be? It could be weaker," he said on Wednesday, October 26.

Dewi ensured that the government really thought about every step taken in fiscal implementation so that it could provide the maximum benefit for the Indonesian people.

This is then our reference to be held. When you want to make a policy, you must see from how much expenditure allocation, how much income you have and will cover (the budget deficit) uses. So it really should not be maintained more than 60 percent of GDP," he said.

On the same occasion, Deputy Director of Polytechnic STAN Evy Mulyani revealed that the reference for the debt to GDP ratio came from a mutual agreement that took place in Europe.

"So we are not alone. This provision has existed since the 80-90s era. We then adopted the scheme by going through an adaptation process," he said.

One thing that Evy highlighted was how this policy could continue in accordance with applicable regulations.

"The most crucial thing actually implements it consistently," he said.

Even though it is within the scope of government, Evy as a academic community is open to efforts to find the best solution in managing state finances.

"In terms of academics, this is something quite fair if we look at many journals that have criticized 3 percent (policy) or 60 percent (the debt to GDP ratio), whether it is indeed appropriate or a myth," he said.

To note, the government's debt policy refers to the State Finance Law Number 17 of 2003 Article 12 Paragraph 3 which explains that the number of loans is limited to a maximum of 60 percent of gross domestic product.

Meanwhile, in the latest report of the Ministry of Finance, it was revealed that the government's debt until the end of September 2022 was IDR 7,420.4 trillion 39.3 percent or equivalent to GDP.