The Republic Of Indonesia's Debt Is Phantomed By The GROWth Of Interests, The Government Is Focusing On Risk Management Of Fund Costs

Illustration (Photo: Doc. Antara)

JAKARTA The Director General of Fiscal Balance at the Ministry of Finance Luky Alfirman acknowledged that it is believed that the trend of rising interest rates will continue for some time to come. According to him, this of course affects the cost of funds (cost of funds) on debts owned by the government.

"Indeed, if you look at the tendency to increase the cost of funds, which is a necessity," he said when answering reporters' questions at a press conference on our State Budget, quoted on Friday, November 25.

According to Luky, his party has prepared a number of financing strategies that will be optimized in 2023 in order to maintain a healthy state financial structure.

"We will finance it based on an opportunistic, flexible and prudent strategy," he stressed.

Luky explained that the government provides budget pads through the use of the remaining large enough budget financing (SiLPA) from 2022. He claims this will be quite helpful in line with the mandatory fiscal deficit below 3 percent next year.

"Thus, the need for financing will decrease, so that with this high cost of funds it will be good if we reduce the issuance of state securities (SBN)," he said.

Sri Mulyani's subordinate also revealed that the government will increase cooperation with development partners, both bilaterally and multilaterally, in order to get better interest rate support.

"This may be a support from the World Bank, Asian Development Bank and so on to be able to help finance," he added.

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"We also continue to explore the market, especially on the retail side, which is useful for expanding the base of domestic investors who tend to be more stable in dealing with market conditions in the midst of volatile situations," Luky continued.

According to VOI records, the value of government debt based on the latest publication is IDR 7,420.4 trillion in September 2022. This figure is equivalent to 39.3 percent of gross domestic product (GDP).

This book is also the highest in the last four months after consistently climbing from May of IDR 7,002.24 trillion. Then, June amounted to IDR 7,123.62 trillion, July amounted to IDR 7,163.1 trillion and August IDR 7,236. trillion.

Meanwhile, the debt stipulation is regulated in the State Finance Law Number 17 of 2003 Article 12 Paragraph 3 which mandates the maximum debt limit is 60 percent of GDP.

Just so you know, Indonesia will at least pay interest of IDR 317.8 trillion in 2020 or 19.4 percent of the total state revenue in that period.

In fact, the amount of interest on debt that the government has to pay has shot up to IDR 405.9 trillion for the 2022 period. This figure is equivalent to 17 percent of APBN revenue in accordance with Presidential Decree 98/2022.