THE EDITOR – Managing Director of Political Economy and Policy Studies (PEPS) Anthony Budiawan revealed that the ratio of Indonesia’s current foreign debt is already at a dangerous level and will lead the country prone to crisis.
In a talk with The Editor on Friday (28/3/2025) evening in Senayan, Anthony said that this condition could cause valuta or fiscal crisis.
The valuta crisis itself is a condition where a country’s currency value drastically drops in all of a sudden. One of the reasons that could cause it is the country’s rising debt.
The Performance Report of the Directorate General of Financing and Risk Management issued by the Ministry of Finance in December 2024 shows that the debt value of Indonesia has been rising as much as 1.22% to IDR 8,909.14 trillion.
On the other hand, the country’s 2024 revenue that was recorded by the Ministry of Finance was only IDR 2,842.5 trillion. The number is obtained from tax revenue of IDR 1,932.4 trillion, from customs and excise of IDR 300.2 trillion, and non-tax state revenue (PNBP) of IDR 579.5 trillion.
With such data, Anthony demands the government not to mislead the public by saying that the country’s finance can pay the debt. Because, in fact, the debts have always been paid with new debt securities.
The debt is also, he added, dominated by foreign debts (60%). Meanwhile, Indonesia’s ability in earning foreign exchange to pay it is very low.
“If the ability to earn foreign exchange is very low, then foreign debts will be a burden,” he said.
DEBT SHOULD NOT BE PAID BY DEBT SECURITIES
Anthony explained that the government must prepare new instruments in order for Indonesia not to have more foreign debts, so the country’s revenue can be surplus to pay the debts and the interests.
It is because the only way to pay the debts, he said, is by increasing the revenue and not by issuing new debt securities.
“The country’s debt can only be paid if there’s any surplus in the country’s revenue. It’s important for the public to know this principle. The government can only pay the country’s debt if there’s any surplus,” he said.
“Where does the government get the money from? It pays the debt by issuing new debt securities, which means the old debt is paid by new debt. Therefore, the amount rose in 2018 even though the debt due in 2018 had been paid beforehand. The payment was done by issuing new debt securities,” he explained.
Anthony reminds that if the interest of the debt is paid by new debt securities, the country’s debt will increase quickly. This situation will cause the critical fiscal condition at the end.
