ADB Economist Says Indonesia's Debt Position Is Still In Safe Condition

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JAKARTA - Main Economist of the Department of Economic Research and Regional Cooperation of the Asian Development Bank (ADB) Arief Ramayandi believes that Indonesia's debt position is still relatively safe.

"The debt ratio actually has no standard boundaries. The debt ratio is about management," Arief told reporters in Jakarta, quoted from Antara, Thursday, May 16.

The ratio of government debt in 2023 was recorded to decrease to 38.6 percent of gross domestic product (GDP) from the previous 39.7 percent in 2022. Meanwhile, the realization of budget financing in 2023 reached IDR 359.5 trillion, down 39.2 percent compared to 2022.

The World Bank issued a debt ratio standard of 60 percent. However, Japan's debt ratio has remained above 200 percent of GDP over the past few years. The United States is also still recording debt ratios above 100 percent after the pandemic. However, the two countries were able to show good debt management.

"So, it depends on what we take the debt for, what we spend it on, and whether the expenditure we spend can get the income returns to pay our debts in the future," he said.

Connecting this, Arief assessed that the free lunch program carried out by the elected presidential and vice presidential candidates Prabowo Subianto and Gibran Rakabuming Raka still made sense to do.

He agreed that there would be a budget burden that would arise as a result of the implementation of the program. However, he sees that the country's fiscal capabilities are still relatively strong. The tax revenue ratio, which is at the level of 10.2 percent in 2023, is also still possible to be boosted in the future.

"Indonesia's potential to increase state revenue is still large, so if programs like this are managed effectively and efficiently, it is a program that can be financed," explained Arief.

Moreover, Indonesia's fiscal deficit is still below the set target. He believes that the Indonesian economy will still be fine despite the burden of new expenses.

"If the increase in spending is still in the range of our receipts and expenses, it looks like (fiscal) will be fine," he explained.