Tuesday, 15 October 2019 | 05:33 WIB

MoF: Indonesian Government Manages Debt Prudently

Indonesia Finance Minister Sri Mulyani Indrawati (kemenkeu)

JAKARTA, NETRALNEWS.COM - Indonesia Minister of Finance Sri Mulyani Indrawati has stressed that the Indonesian Government always manages its debt prudently. So far, the Government's debt position is still in a safe condition.

When attending the DPR Commission XI Meeting with the National Development Planning Agency (Bappenas), BPS, BI and the Indonesia Financial Services Authority (OJK), at Nusantara I Building, Jakarta, Monday (06/17/2019), the Minister of Finance explained, macroeconomic management policies to achieve development goals including debt instruments are flexible.

If the economic conditions have improved (healthy enough), the debt will be reduced so that the fiscal space in the APBN can be increased.

Because of that, the Minister of Finance reminded that debt should be seen as a tool not a goal. For example, the Government is actively issuing retail bonds to the domestic community, among others, to expand the investment market.

If the domestic community is more dominant in investing in the government debt market, it is expected to reduce volatility in the event of a global economic shock.

"The state budget including financing or debt is an instrument. When the economy weakens, debt is used as a counter cyclical to counter weakening. "Fiscal (policy) is designed mainly in the deficit, not as a stand alone policy, but it is part of macroeconomic management in order to achieve development goals," said the Minister of Finance.

Refer to signs

Furthermore, Minister of Finance Sru Mulyani Indrawati said that Government debt was managed very carefully, referring to the guidelines stipulated in Law Number 17 of 2003 concerning State Finance.

"In Law Number 17 it is very clear and we continue to repeat that we will continue to maintain according to the laws and regulations. Less than 3% of the annual deficit and total debt should not be more than 60% and even now we use a hard limit of 30% even though the Act allows up to 60%," she said.

In addition, the Minister of Finance also explained that the parties should not only focus on the amount of debt, but also in terms of the quality of Government expenditure allocations used for productive sectors (eg infrastructure, education, health and regional expenditure). Moreover, the trend of Government debt continues to decline while the allocation of spending in the productive sector is increasing.

"We are very careful, extremely careful in managing debt. (The indicator is, among others) the risk of debt interest has decreased consistently since getting investment grade until now. We try to reduce the risk of foreign exchange now below 40%. Our debt is due within 3 years to remain stable," she concluded.