Sri Mulyani responds to criticism of rising government debt in the era of President Jokowi Page all

JAKARTA, KOMPAS.com – The Minister of Finance (Menkeu), Sri Mulyani Indrawati, responded to criticism from various parties on the controversy of the growing Indonesian public debt in recent times.

According to the former managing director of the World Bank, public debt, including Indonesia’s foreign debt, has been planned in advance to balance the state budget stance.

The government’s debt planning has been set out in Presidential Decree 72/2020 on Posture Adjustment and Details of the 2020 State Budget. Sri Mulyani criticized those who questioned debt policy in the era of President Jokowi.

“There are people these days who like to talk about debt problems, they only say that in Presidential Decree 72 the term for the 2020 State Budget with such an estimated deficit, financing is from SBN, loans, bilateral or multilateral” Sri Mulyani said in the KiTa State Budget. virtual, Monday (11/23/2020).

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“So when we are executing the Presidential Decree, do not react. It is as if we are like people who have no plans. Those are all the Perpres 72 issues that have been discussed, they have been broadcast to the public,” he said again.

Sri Mulyani, who was also dean of the Faculty of Economics at the University of Indonesia, emphasized that the level of debt of the world’s countries has increased due to the Covid-19 pandemic.

The same happened also in Indonesia, where, according to him, Indonesia’s debt level increased in the range of 36% to 37% of GDP, which was previously 30% of GDP. This number is even lower compared to other countries.

“However, that does not mean that we are not vigilant, but we will maintain all conditions, this is so that the economy continues to improve and fiscal conditions remain sustainable,” said Sri Mulyani.

Also read: In 2 weeks, Jokowi increases RI’s bilateral debt by 24.5 trillion IDR

Indonesia’s total debt was recorded up to the end of September 2020 at IDR 5,756.87 trillion. Therefore, the share of public debt is 36.41 percent of GDP.

Total public debt is made up of loans of 864.29 trillion IDR and government securities (SBN) of 4,892.57 trillion IDR.

The State Treasurer explained that the G20 member countries experienced an extraordinary increase in their debt levels.

For countries that are included in the category of developed countries, the level of debt reaches 130 percent of normal conditions, which are usually 100 percent. Meanwhile, for developing countries whose debt ratio is usually in the 50 percent range, it increases to the 60 to 70 percent range.

“With support countercyclical It is extraordinary that in all the countries of the world, not only in the G20 countries, public debt in all countries has increased ”, he explained.

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Sri Mulyani also explained that the debt ratio was quite low compared to other countries due to the more moderate fiscal support to the economic downturn in Indonesia.

Indonesia has budgeted a budget support of IDR 695.2 trillion for Covid-19 Management and National Economic Recovery (PC-PEN).

The additional spending resulted in a budget deficit that reached IDR 1,039.2 trillion or 6.34 percent of GDP.

“The additional amount of fiscal support to deal with Covid-19 and boost the economy, Indonesia is in the modest part. After China. In this case and the changes from the deficit side, this is mainly aimed at providing support to the economy and spending in the health sector, “explained Sri. Mulyani.

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Bilateral debt soared

The Indonesian government attracts a large amount of foreign debt in a relatively short period of time or less than two weeks. Indonesia’s total new debt increased by more than Rs 24.5 trillion.

New debt is a category of bilateral loans. The details of the external debt come from Australia worth 15.45 trillion rupees and Germany’s bilateral debt worth 9.1 trillion rupees.

The government claims that the withdrawal of new debt from Germany and Australia was carried out to support various activities to contain the Covid-19 pandemic.

Australian Finance Minister Josh Frydenberg said the loan money was made because Indonesia was seen as having resilience and a recovery process that tended to be rapid during the Covid-19 pandemic.

Also read: Sri Mulyani: Indonesia’s debt level is still below other countries, does not mean it is not alert

“This assistance reflects a situation that we must face together. Apart from that, it also relates to Indonesia’s reputation in terms of fiscal management,” he said at a joint press conference with the Indonesian government.

Meanwhile, the German Government through the Embassy of the Federal Republic of Germany announced the signing of a debt agreement worth 550 million euros. The government of President Jokowi officially consolidates bilateral loans, amounting to 9.1 trillion rupees.

“The loan contract worth 550 million euros has been signed separately at the offices of the German Development Bank KfW in Frankfurt and at the Ministry of Finance in Jakarta, in accordance with the conditions of the pandemic,” the Embassy wrote. of Germany in Indonesia on the official Twitter account of the German Embassy in Indonesia.

The policy of attracting new foreign debt to overcome this krone has drawn much criticism because Indonesia’s debt burden is currently considered high enough.

Also read: Former Finance Minister criticizes Jokowi for increasing debt during the pandemic

One of the criticisms came from former Finance Minister Rizal Ramli. He said the government was seen as wrong if it continued to increase foreign debt.

“Issue debt securities (captivity) flowers are getting more and more expensive. To pay interest on the debt, you must go back into debt. It’s getting worse, “wrote Rizal Ramli on his personal Twitter account quoted on Saturday (11/21/2020).

Rizal Ramli, who was also Indonesia’s former coordinating minister for Maritime Affairs in the era of President Jokowi, said that Indonesia had started racking up bilateral loan debt again after having obtained a large amount of bond debt.

“So when I started to change the strategy to become ‘bilateral debt beggars’ from one country to another, it was the smiling face that made me change. shock“Rizal Ramli said.

Also read: 2 periods Jokowi, RI’s external debt increases 1,721 trillion rupees

(Source: KOMPAS.com/Mutia Fauzia | Publisher: Bambang P. Jatmiko)