Indonesia’s Debt Ratio Predicted to Increase at the End of the Year
LiputanIslam.com— The Ministry of Finance (Kemenkeu) predicts that Indonesia’s debt ratio at the end of 2020 will increase to 37.6 percent of Gross Domestic Product (PDB).
The Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Nathan Kacaribu, said that the increase occurred after the budget deficit was widened to 6.34 percent of GDP according to Presidential Decree 72/2020.
“A deficit of 6.34 percent in 2020, the debt to GDP ratio will reach 37.6 percent and this is indeed a risk and needs to be monitored,” he said on Wednesday (19/8).
At the beginning of the year, the government debt ratio had reached 30.21 percent of GDP or equivalent to Rp 4.817.55 trillion. Then, this figure rose in June to 32.67 percent of GDP. The debt position is equivalent to Rp 5.264.07 trillion.
According to Febrio, the increase in the debt ratio is likely to continue until 2021 because the government will still set a fairly large budget deficit in the range of 5.5 percent of GDP which is equivalent to Rp 971.2 trillion.
It will make the debt-to-GDP ratio until the end of 2021 increase again because the deficit in 2021 cannot be significantly reduced from the position of 6.34 percent in 2020.
“The posture of the 2021 Draft State Budget. A deficit of Rp 971.2 trillion, equivalent to 5.5 percent. In this case, it will cause the debt to GDP ratio to rise again around 40 percent of GDP. Earlier, it was 37.6 percent of GDP,” he remarked.
This risk must inevitably be taken because the government still needs to continue the economic recovery program and tackle COVID-19. For 2021, the government has increased the expenditure allocation for the health sector by Rp 169.7 trillion or equivalent to 6.2 percent of GDP.
Then, the expenditure for education is Rp 549.5 trillion or 20 percent of the total expenditure in the APBN, the development of communication and information technology (ICT) is Rp 30.5 trillion, and infrastructure development is Rp 414 trillion. (sh/tirto/cnnindonesia)