Despite Rising Debt, Indonesia's GDP Also Grows

Indonesia's foreign debt and central government debt have shown year-on-year increases. However, this debt increase has also coincided with Indonesia's economic growth (Gross Domestic Product/GDP). While some consider Indonesia's debt alarming, others believe it is manageable and under control. A common indicator for measuring a country's debt ratio is the amount of debt relative to GDP.

Based on data from the Directorate General of Financing and Risk Management of the Ministry of Finance, central government debt in 2017 reached Rp 3,938.45 trillion, or approximately 29.98% of GDP at current prices, which reached Rp 13,588.8 trillion. Indonesia's foreign debt last year, according to Bank Indonesia, reached US$ 352.88 billion, or approximately Rp 4,780.92 trillion at an exchange rate of Rp 13,548 per US dollar. This amount is equivalent to 34.68% of GDP.

The central government's debt ratio of approximately 30% of GDP remains below the limit mandated by the State Finance Law No. 17 of 2003, which is 60%. The government's debt ratio is also lower compared to other countries such as Turkey (35%), the Philippines (34%), and Thailand (40%). Similarly, Indonesia's foreign debt, at 35% of GDP, is lower than Turkey's (54%) and Malaysia's (68%).

(Read Databoks: Inilah Rasio Utang Luar Negeri Indonesia dan Utang Pemerintah)