Ma'ruf Amin Talks About Indonesia's Debt Ratio: It's Still Safe

Capture Vice President Ma'ruf Amin's screen in a virtual discussion. (Mery Handayani / VOI)

JAKARTA - Vice President of the Republic of Indonesia (RI) Ma'ruf Amin claims that the current government debt position is still in a safe position. In fact, until the end of March this year the government debt had reached Rp1,645 trillion.

Even though government debt has swelled, Ma'ruf Amin emphasized that the position of the government debt ratio is still in accordance with Law Number 17 of 2013 concerning State Finances which sets a debt ratio limit of up to 60 percent of gross domestic product (GDP).

"The position of the ratio of government debt to GDP in March 2020 was recorded at 32.50 percent and is still in a safe position. In accordance with the law on state finances," he said, at the launching event of the Corona Pandemic Book: Deglobalization Virus, Future of Global and National Economy, Jakarta , Monday, July 13th.

Ma'ruf explained that the swelling of government debt was caused by the need for an increased budget for handling the impact of the COVID-19 pandemic, amounting to Rp.695.2 trillion. According to him, these funds are used by the government to increase the acceleration of state spending.

"The policy instrument used to cover the deficit is by utilizing the excess budget (SAL), then through debt financing of Rp1,645.3 trillion," he explained.

In handling the COVID-19 pandemic, Ma'ruf said, the government has taken various extraordinary policy steps that are fast in the economic sector, especially with the support of regulations in order to provide for development financing which has increased drastically.

According to him, with the enactment of Perppu 1/2020 which has been passed into Law 2/2020 at the same time two important things are embedded, namely to increase financing and strengthen coordination.

"Two important things in this regulation. First, this is a way for the government to increase financing by widening the APBN deficit to a wider range of more than 3 percent for 3 years," he said.

Then, the second is to strengthen coordination for the policy mix between the financial sector and the government in protecting customers and dealing with threats to financial system stability.

In addition, said Ma'ruf, the government has issued PP No. 23/2020 which regulates the National Economic Recovery (PEN) program for handling COVID-19. As is well known, PEN aims to protect, maintain and improve the economic capacity of business actors.

"This program holds the principles of social justice principles aimed at the great prosperity of the people while still establishing the principles of prudence and good governance in implementing policies," he said.

Then, continued Ma'ruf, sharing costs and risks between stakeholders according to their respective duties and authorities, the concrete forms of implementing the PEN program are PMN participation in BUMN, placement of government investment funds, guarantees, and state spending.