The Cost Of Debt Is Guaranteed To Rise, This Is The Government's Strategy To Prepare The 2023 RAPBN

Illustration (Photo: Doc. Antara)

JAKARTA – The government through the Ministry of Finance considers that the economic challenges ahead are still quite dynamic. The reason is that the upward trend in inflation will certainly be responded by tightening liquidity to an increase in the benchmark interest rate by the central bank, especially in developed and influential countries such as the United States (US).

“It can be concluded that the direction is certain, namely high inflation and therefore a tighter and higher monetary policy for the interest rate. The only question is how high and how fast," said Minister of Finance (Menkeu) Sri Mulyani while attending a working meeting with Commission XI of the DPR on Wednesday, June 8.

According to the state treasurer, this condition is believed to have a propagation effect on the cost of money for government debt. For this reason, the Minister of Finance considers that the preparation of the 2023 RAPBN must be carried out carefully considering that next year the budget deficit level must fall below 3 percent.

“It means that the cost of money will be higher. For this reason, the implication in this macro assumption is regarding interest rates, and also the second implication is on the state budget posture which must be maintained in terms of sustainability, from the size of the deficit that we will achieve in the discussion of the 2023 RAPBN," he said.

To note, the trend of rising interest rates in developed countries has begun. One of the concerns is the monetary policy of the US central bank The Federal Reserve (The Fed) which has raised the interest rate by 50 basis points (bps) at the beginning of last month. The move is believed to continue up to 350 bps throughout the year.

The Fed's attitude certainly has an effect on the strengthening dollar exchange rate. As a propagation effect, the Indonesian government has to pay extra for interest payments on debt securities released in dollar denominations.

"We continue to see global dynamics, namely interest rates which tend to rise and the dollar tends to be made stronger, including the euro and yen," closed the Minister of Finance Sri Mulyani.