Deputy Minister Of Finance Suahasil: State Debt Functions As A Tool Of Economic Growth

Deputy Minister of Finance (Wamenkeu) RI Suahasil Nazara. (Photo: Doc. Antara)

JAKARTA - Deputy Minister of Finance of the Republic of Indonesia Suahasil Nazara said that the current state debt serves as a tool for economic growth.

"The debt is needed so that the government can carry out important and urgent functions more quickly without delay," said Suahasil while attending a public lecture at Lambung Mangkurat University, quoted from Antara, Friday, September 29.

Suhasil gave an example when Indonesia was hit by the COVID-19 pandemic, the state debt had a crucial role to play in widening the deficit in the State Revenue and Expenditure Budget (APBN). With the increase in state spending, Indonesia can immediately restructure the economy that has slowed down due to the COVID-19 pandemic.

The Ministry of Finance (Kemenkeu) noted that until July 2023 Indonesia's debt reached IDR 7,855.53 trillion, with a ratio of 37.78 percent to Gross Domestic Product (GDP).

In detail, the state debt is dominated by domestic debt of 72.42 percent. Meanwhile, Indonesia's foreign debt position was recorded at 396.3 billion US dollars. Meanwhile, based on the instrument, the majority composition of government debt is in the form of Government Securities (SBN) which reached 88.92 percent.

In his presentation, Suahasil explained that Indonesia's debt position is still safe. The total world debt was recorded at IDR 69 trillion. Compared to other developed countries, Indonesia's debt portion is much lower by 0.4 percent.

"Even though it is far below developed countries, Indonesia continues to maintain the level of debt to GDP so that fiscal sustainability is maintained," he explained.

Furthermore, Suahasil explained the reason the government needed debt as a scheme for state development. First, debt is needed to maintain momentum and avoid the loss of opportunities or opportunities loss.

Second, debt serves as a tool to maintain and accelerate economic growth. Then third, debt serves as a coordination route with Bank Indonesia (BI) as a Central Bank.

Fourth, debt can develop financial markets.

"Fifth, debt can involve the participation of the next generation through an investment scheme that is able to provide long-term benefits," he concluded.