Debt Financing Drops 21 Percent, Sri Mulyani: The State Budget Is Getting Healthier

Minister of Finance Sri Mulyani (Photo: Capture UOB Indonesia's Youtube screen)

JAKARTA - Minister of Finance, Sri Mulyani, said that the realization of financing through the issuance of debt securities until October 31, 2022, had decreased by 21.7 percent compared to the same period in 2021 (year on year/YoY).

According to her, debt financing management performance is maintained to deal with volatile financial market conditions with rising interest rates and fluctuating rupiah exchange rates.

"This means that the state budget is starting to get healthier because we are starting to take steps to consolidate", she said when explaining the realization of state finances, quoted on Monday, November 28.

The Minister of Finance detailed that the realization of debt financing until October 31 was IDR 506 trillion. This figure is lower than October 2021 which amounted to IDR 646 trillion.

"We can see that last month we issued a net State Securities (SBN) of IDR 500.3 trillion, less than last year's IDR 668.7 trillion. Likewise, net loans of only IDR 5.7 trillion decreased drastically from IDR 22.7 trillion", she said.

For this reason, the Minister of Finance revealed that the direction of debt management would be based on four important aspects. First, the target for the issuance of debt securities in the fourth quarter will be lowered by taking into account the condition of the state treasury.

Two, the issuance of domestic SBN in the framework of the SKB III will be more optimized. Third, retail SBN issuance will be driven more by the expansion of the investor base.

"And finally, the flexibility of program loans is used as a source of financing in anticipating the volatility of world financial markets", said the Minister of Finance.

For information, the decline in the realization of debt withdrawals cannot be separated from the achievement of the State Budget which has posted a surplus for nine consecutive months. Meanwhile, this year's budget deficit only occurred in October of IDR 169.5 trillion as the excess payment of energy compensation to Pertamina and PLN.

Meanwhile, the position of government debt as of October 31, 2022, is IDR 7,496.7 trillion, equivalent to 38.36 percent of gross domestic product (GDP).