Controlling Debt Burden With Interest Of IDR 373 Trillion Per Year, This Economist Proposes Government Negotiations, Cuts Employee Spending

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JAKARTA - Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira said there are at least five keys in order to mitigate and control government debt, which is rising significantly and is causing concern.

"Mitigation of debt so as not to increase is first, to negotiate debt immediately," he told Antara in Jakarta, Saturday, June 26.

Bhima stated that negotiations could be given to the state to suspend debt payments, especially in the context of the COVID-19 pandemic.

He said that if Indonesia has a heavy debt burden with an interest of IDR 373 trillion per year, it can ask creditors for relief so that interest payments on its debt are postponed until 2022 or 2023.

Second, regarding tax revenues, which means that the tax ratio must be increased, one of which is an increase in tax compliance.

The third is about tax incentives. According to Bhima, it should be stopped, especially in sectors that have been given a stimulus but have not been effective.

Fourth, narrowing the space for corrupt behavior in the enforcement of tax regulations because this can harm tax revenues.

"It also harms tax revenues, which in the end the burden between adding debt and paying debt obligations is getting heavier," he said.

Finally, the government can make stricter savings on bureaucratic expenditures such as personnel spending and goods spending.

"Shopping that is not urgent, such as business trips, can be trimmed because the fiscal space must also be maintained so that we can still carry out other more urgent purchases," he said.

Bhima explained that the problem in debt management so far is not about increasing the amount but related to the productivity of the debt to produce greater foreign exchange (forex).

"Moreover, the debt is issued in the form of foreign debt, so the foreign debt must be paid in dollars in foreign currency," he said.

Therefore, he said the government should be able to encourage more foreign exchange-producing sectors such as exports and foreign exchange from the workforce.

"That should be pushed now. So, so far, that has been the problem," he said.