JAKARTA - Economist Bright Institute Awalil Rizky revealed that government debt financing has reached IDR 349.3 trillion, this figure is much larger than in previous years, namely IDR 132.16 trillion (2024), IDR 150.39 trillion (2023), and IDR 90.97 trillion (2022) and almost equaled the record during the COVID-19 pandemic in 2020 of IDR 360.66 trillion.
He added that the government has realized 45.02 percent of the total debt financing target in 2025 which is IDR 775.87 trillion and is the highest realization compared to the same period in previous years, namely 20.4 percent (2024), 21.6 percent (2023), 9.3 percent (2022), 28 percent (2021), and 35.8 percent (2020).
"The government has owed more and far beyond the need to cover the deficit. On various occasions, the Ministry of Finance explained it as a front loading strategy and was claimed to meet the on-track financing target. The reasons put forward in the form of cost of funds remain efficient and the risks that continue to be mitigated," he explained in his statement, Thursday, June 19.
Awalil assessed that during the last few months of 2025, the debt cost was quite higher than usual and Yield's Government Securities were almost always above the historical average level so far.
"The government is forcing more and immediate debt, which could mean that future expectations will be worse. At least, the debt costs that must be paid will increase due to a period of time," he added.
He considered that the informationed debt financing was a net value, or after taking into account the principal debt that was due and the withdrawal of new debt was greater than debt financing, and the Ministry of Finance did not clearly convey the amount.
"In the withdrawal of new debt, the biggest source is the issuance of Government Securities (SBN). The largest portion of SBN is the one who is nominated for rupiah or also known as domestic SBN. The buyer or owner of this domestic SBN comes from foreign and domestic actors," he said.
The foreign ownership of domestic SBN traded until the end of May was only 14.56 percent, or not much different from the end of December 2024 which was 14.52 percent.
In addition, domestic ownership, including Bank Indonesia and commercial banks, is the main thing, meaning that the largest source of government debt financing is from within the country.
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Awalil assessed that, despite the apparent lower risk of financing than the majority by foreigners, there were other questions, there were other problems, namely that the government absorbed funds had the potential to reduce the availability of funds for the private sector for investment and this was known as the effect of crowding out, namely when government financing eliminated the role of the private sector in driving the economy.
"Government spending is clearly very necessary, and it is okay to partially finance debt. However, if it has exceeded certain limits and hinders private sources of financing, known as crowding out. Moreover, if it turns out that government spending is not effective, it clearly cannot be claimed as an expansive state budget," he said.
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