Sri Mulyani Warns Global Inflation That Potentially Disrupts Purchasing Power And Increases RI's Debt Burden

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said that the government is still monitoring the inflation movement which is dominant in many countries in the world.

"This inflation will push interest rates up and tighten liquidity, of course, it can have a spillover impact that must be watched out for," she said through a virtual channel after meeting President Joko Widodo at the Merdeka Palace, Jakarta, Wednesday, February 16.

According to the Minister of Finance, the effect of the monetary policy adjustments of countries in the world, especially developed countries, will have an impact on the flow of foreign capital into Indonesia.

"The influence can be in the form of capital flows which will have a negative impact on interest rate increases and also in terms of yields or yields from SBN, which will certainly push up costs for government bonds," she said.

In the Minister of Finance's explanation, the country most likely to have an impact is the United States with inflation growth that has reached 7.5 percent in February 2022. The state treasurer herself had given a signal that the Fed's interest rate hike was believed to occur in March 2023.

“This environment must be watched out for. In fact, in emerging countries, inflation has also increased. We see now Argentina's inflation is 50 percent. Then, Turkey reached 48 percent, Brazil 10.4 percent, and Mexico with 7.1 percent inflation," she said.

According to VOI's records, the government in the 2022 period plans to pay debt interest of IDR 405.86 trillion or 20.87 percent of the total central government spending.

Of this amount, IDR 393.6 trillion was paid for domestic debt interest and IDR 12.17 trillion was interest payments on foreign debt.

Meanwhile, based on the January 2022 edition of our APBN report, it is known that the government debt until the end of December 2021 was recorded at IDR 6,908.87 trillion.

“High inflation will certainly threaten the economic recovery process because people's purchasing power will be eroded. This is something to be wary of," closed the Minister of Finance Sri Mulyani.