Debt Of IDR 8,325 Trillion, Exchange Rate IDR 16,650: Crisis 2025 Worse Than 1998?

Legal and Development Observer, Hardjuno Wiwoho. (Photo: Special)

JAKARTA - The rupiah exchange rate against the United States (US) dollar continues to weaken to the lowest level since the 1998 monetary crisis. The rupiah exchange rate weakened by 14 points or 0.08 percent to Rp. 16,676 per US dollar from the previous Rp. 16,562 per US dollar.

Legal and Development Observer, Hardjuno Wiwoho, emphasized that the decline in the rupiah currency reminded the public of the 1998 monetary crisis. Even Indonesia's current economic condition is worse than 27 years ago.

"In 1998, when the rupiah was in the position of Rp. 16,650 per dollar, our total foreign debt was only around US$70 billion, or equivalent to Rp. 1,165 trillion. Now, with the same exchange rate, our foreign debt has reached USD 500 billion, which is around Rp. 8,325 trillion. Up seven times," said Hardjuno, quoted on Saturday, March 29.

According to him, this fact shows that the current rupiah does not reflect Indonesia's economic fundamental conditions honestly.

"This means that the exchange rate that looks now may not represent the real pressure on the rupiah. It may even be too strong compared to reality," he said.

The doctoral candidate for Law and Development at Airlangga University (Unair) also mentioned the strategic holding of BUMN, Daya Anagata Nusantara (BPI Danantara) with assets of up to IDR 10,000 trillion. Although the asset figure seems large, the value is not very striking when compared to Indonesia's current total foreign debt.

Our best assets such as Danantara alone are not necessarily enough to pay off all foreign debts that have reached Rp8,325 trillion (US$500 billion). This is worrying. If the country's mainstay assets cannot cover the debt, it means we have to be very careful," he said.

Furthermore, Hardjuno criticized the government's approach, which has seemed to allow debt to accumulate without any clear repayment strategy. In fact, the debt must be paid.

"If we can't pay, it means that we can't afford it. So there must be a way out. This cannot continue to be left as it is now," he said.

Hardjuno questioned fiscal accountability in the midst of a government system that always changes, but passed on to the same burden year after year.

"If all ministers change, who is responsible for all of this? This debt problem has clearly started from the BLBI Recap Bonds which continue to be ignored. That's the root of the problem," he said.

However, Hardjuno appreciated President Prabowo Subianto's recent steps to cut the state budget. Prabowo's courage is something that has never happened in the previous government era. However, Hardjuno stressed, this budget cuts policy has not been quite effective without being accompanied by further steps.

"Yes, that's a good step. But after that what? There must be a concrete and brave big plan. Not just a short-term reaction," he said.

Hardjuno further called for the importance of national dialogue on the nation's debt, fiscal, and economic sustainability.

"We have to start talking honestly and transparently. This is a matter of the future of the country. There must be a comprehensive and realistic solution," he concluded.