Indonesia’s debt balloons due to state finance mismanagement, disorientation

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Ichsanuddin Noorsy
Ichsanuddin Noorsy. (Source: Special)

Jakarta, IO – The government debt of Rp7,000 trillion cannot be verified and validated because according to data from Bank Indonesia (BI), the latest figure by February was Rp5,956 trillion. “So, the question is who should we trust, BI or the Finance Ministry?” economist Ichsanuddin Noorsy told the Independent Observer, on Wednesday (13/4). 

“If the numbers are different, then the status is like BPS data, a lot of bias and uncertainty. This shows the level of debt security is problematic. Debt to service ratio (DSR) is 34.5% of GDP, it has steadily declined from 39%.” 

Read: THE PERILS OF MOUNTING GOV’T DEBT How the rich get richer and the poor get poorer

According to Ichsanuddin, the 34.5% drop shows that Indonesia’s debt remains vulnerable because first, the dollar component remains high, meaning that any fluctuation in the US dollar will affect the DSR because its share is around 60%. 

Second, Indonesia is also bound by an agreement whereby the country cannot demand other country to pay in rupiah. Third, Indonesia also does not have added value to its products and services. Fourth, the manufacturing industry and many other industries are controlled by foreigners.