Indonesia's 2019 Government Debt to Reach 5.269 Trillion Rupiah

Central government debt is projected to reach Rp 4,429 trillion (2018 outlook), an 11% increase compared to the 2017 realization. Then, in the 2019 State Budget, government debt is predicted to increase by 18.9% to Rp 5,269 trillion, or approximately 32.6% of the national Gross Domestic Product (GDP). Although nominally very large, it remains within safe limits.

Nominally, government debt has increased year on year, but according to the total debt-to-GDP ratio indicator, it remains around 30% because the domestic economy is also growing. This is still below the legal limit of 60% of GDP. This ratio is also lower than that of other developing countries such as Thailand (currently 41.8% of GDP), Vietnam (61.5%), Malaysia (50.9%), Argentina (51%), and Brazil (74%), as well as the debt ratio of developed countries, which has exceeded 100% of GDP.

Limited state revenue and government expansion in financing development have resulted in a government budget deficit. To cover this deficit, the government issues debt securities or seeks loans from creditors. Importantly, the use of this debt must be well-managed, used for productive sectors and targeted appropriately. Therefore, development financed by this debt can leverage national economic growth and not become a burden on future generations.

(Read Databoks: Indonesia in Debt Emergency?)