Unable To Pay Debt, Ministry Of Finance Denies The Statement Of The Acting Governor Of South Sulawesi Regarding Bankruptcy

JAKARTA - The Ministry of Finance (Kemenkeu) straightened out the statement from the Acting Governor of South Sulawesi (Sulsel), Bahtiar Bahharuddin, who said that South Sulawesi Province was bankrupt.

Special Staff to the Minister of Finance for Strategic Communication Yustinus Prastowo assessed that the use of the word 'bangkrut' was inappropriate in describing the budget conditions of the South Sulawesi Provincial Government in paying off short or long-term debts.

"The use of the term 'bangkrut' is actually not appropriate to interpret the inability of the South Sulawesi Provincial Government in paying off short or long-term debt this year," Prastowo explained in his statement, Monday, October 16.

Prastowo added that the South Sulawesi Provincial Government (Pemprov) was not bankruptcy, but liquidity difficulties as a result of short-term debt management that was less prudent or careful.

According to Prastowo, his party has conducted an analysis of the 2022 Regional Government Financial Report (LKPD) and the 2023 Budget Realization Report (LRA) of the South Sulawesi Provincial Government which shows unhealthy financial performance, especially in the liquidity aspect.

In addition, Prastowo said that in 2023, there will be short-term debt due and long-term debt that is the obligation of the provincial government.

"The problem experienced by the South Sulawesi Provincial Government is neither solvability nor difficulty paying off long-term debt, but liquidity or difficulty paying off short-term debt, considering that the long-term principal installments of debt have been budgeted in the 2023 APBD on financing expenditures," he explained.

According to Prastowo, the high debt obligations of the South Sulawesi Provincial Government can actually be avoided by optimizing revenue and spending efficiency, given the high remaining SILPA budget financing in 2023 and previous years.

It is known that the data up to September 2023 SILPA of the South Sulawesi Provincial Government is IDR 676 billion, and this condition is predicted to continue until the end of the year seeing an increasing trend of local revenue realization (PAD) as well as the accumulation pattern of SILPA in the previous 2 years.

Prastowo said As a solution to this problem, the Ministry of Finance suggested that the South Sulawesi Provincial Government can negotiate short-term debt, restructuring long-term debt, optimizing income and efficiency and reallocation of spending to suppress SILPA, and refinancing as a final step.

Previously, Acting Governor of South Sulawesi Bahtiar Bahharuddin said the condition of the South Sulawesi budget deficit was up to IDR 1.5 trillion and made his area bankrupt due to financial planning errors in a speech introductory to the financial note and a draft South Sulawesi regional regulation on the 2024 APBD in a plenary meeting at the South Sulawesi DPRD, Wednesday (11/10).

"Today I have to be open to all the honorable, all the leaders and members of the DPRD. We have a deficit of IDR 1.5 trillion, South Sulawesi is bankrupt," said Bahtiar in his speech before a member of the South Sulawesi DPRD, Wednesday, October 11.