theIndonesian – Lead Economist of the Economic Research and Regional Cooperation Department of the Asian Development Bank (ADB) Arief Ramayandi believes that Indonesia’s debt position is still in a relatively safe condition.
“The debt ratio actually has no standard limit. The debt ratio is a matter of management,” Arief told reporters in Jakarta on Thursday.
The government debt ratio in 2023 was recorded to fall to 38.6 percent of gross domestic product (GDP) from 39.7 percent in 2022. Meanwhile, the realization of budget financing in 2023 reached Rp359.5 trillion, down 39.2 percent compared to 2022.
The World Bank issued a debt ratio standard of 60 percent. However, Japan’s debt ratio has remained above 200 percent of GDP for the past few years. The United States also still has a debt ratio above 100 percent after the pandemic. However, both countries are able to show good debt management.
“So, it depends on what we take debt for, what we spend it on, and whether the spending we do can get a return on income to pay our debt in the future,” he said.
Continuing this, Arief assessed that the free lunch program promoted by the elected presidential and vice presidential candidates Prabowo Subianto and Gibran Rakabuming Raka still makes sense to do.
He agrees that there will be a budget burden arising from the implementation of the program. However, he sees that the country’s fiscal capacity is still relatively strong. The tax revenue ratio at the level of 10.2 percent in 2023 is also still possible to be boosted in the future.
“Indonesia’s potential to increase state revenue is still large, so a program like this, if managed effectively and efficiently, is a program that can be financed,” Arief explained.
Moreover, Indonesia’s fiscal deficit is still below the set target. He believes the Indonesian economy will remain fine despite the burden of new spending.
“If the increase in spending is still within the range of the difference between our revenue and expenditure, it seems (fiscal) will be fine,” he explained.
The Indonesian
