Government Responds To Debt Issues In The G20 Presidency: No Problem, Our Fiscal Discipline

President Joko Widodo (second from right) with his ministers while attending the G20 Summit in Rome, Italy some time ago. (Photo: Doc. Ministry of Finance)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) stated firmly that Indonesia is ready to carry out its mandate as President of the G20 during the next 2022 period, including in dealing with the issue of state debt.

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, said that the government is not at all bothered by the issue of debt in chairing the G20 forum next year. According to him, Indonesia has a solid state financial foundation and is still in a fairly safe corridor.

"Indonesia's debt has no problem," he said in a webinar entitled G20 Presidency Benefits for Indonesia and the World, Monday, December 6.

Febrio added that this belief was reflected in the government's steps to optimally maintain the health of the State Revenue and Expenditure Budget (APBN) in the pre-pandemic period.

“For many years, especially starting in 2016, our APBN deficit has always been below 3 percent (of Gross Domestic Product/GDP), more often below 2 percent of GDP. So our fiscal discipline is very disciplined,” he said.

This strategy then has an impact on debt management which is recorded as far from the maximum threshold stipulated by law, which is 60 percent of GDP.

"That's what makes our debt-to-GDP ratio very low at 30 percent before the pandemic or to be precise in 2019 and became one of the lowest debt levels in the world," he stressed.

Febrio then compared the amount of the country's obligations with the debts of several countries that are both included in the G20 group.

“The increase in our debt during the pandemic was 'only' 10 percent of GDP. Many countries (in the G20 such as) Argentina, whose debt rose by 50 percent of GDP during the pandemic, are now in crisis. Then China rose by 40 percent, and Brazil, which rose very high and is currently in crisis," he explained.

Therefore, Febrio is optimistic that the debt burden will not hinder Indonesia in the G20 Presidency throughout next year. Moreover, the government has determined that starting in 2023 the APBN deficit will be returned to a level below 3 percent in order to suppress budget financing.

"We have a good fiscal commitment and that's what makes us during the pandemic have strong capital to be able to raise debt very credible. After this, we commit to 2023 for a deficit of 3 percent or lower. So don't worry, our debt is safe," he said.

For information, the level of government debt in the latest APBN report was IDR 6,687.28 trillion or equivalent to 39.69 percent of GDP at the end of October 2021. This book is lower than the position in September 2021 which amounted to IDR 6,711.52 trillion or 41 .38 percent of GDP.