Saturday, December 2, 2023 | 00:14 WIB

Still On The Issue of National Debt

J. Soedradjad Djiwandono
J. Soedradjad Djiwandono, Emeritus Economics Professor, FEB-UI, Jakarta and Professor of International Economics, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

As the writer of the report demonstrates, the increase of debt (both that of government and the SOEs) during the seven years of President Jokowi’s administration has been so huge – in fact larger than the total national debt of the administration of all the previous presidents. 

Total government debt in 2014 stood at USD 209 billion or Rp 2,599 trillion. By early 2022 this number had hit Rupiah 7,014 trillion, for an increase of 170 per cent, while the debt of non-financial SOEs jumped from Rupiah 504 trillion to Rupiah 1,012 trillion. In other words, the national debt that includes both had increased by Rupiah 4,923 trillion. No matter how you want to look at it, this is a huge obligation indeed. 

My take on the issue 

I will repeat what I previously commented on this issue. My concern is directed at those keep arguing that our debt is still safe, whether government or total national debt. 

I am frankly reluctant to state this. I am afraid that argument is based on comparing our national debt with that of developed or even advanced countries. In other words, the evaluation is based on a measurement for advanced economies. To me, it is acceptable to do so, but one must be consistent by taking into consideration related matters, like the fact that advanced countries also usually creditor countries, while Indonesia is not. And more importantly, the tax ratio of advanced countries is usually 30 per cent or higher, compared to Indonesia’s current 9 per cent. These are very different considerations, are they not? If one considers Japan’s debt, the offset is even more dramatic: Japan’s national debt is more than 200 per cent of its GDP. Sure, Indonesia’s debt, which is about 36-37 per cent of GDP, looks good compared to Japan’s. But we must incorporate other factors, as I tried to explain here, to gain a more realistic perspective, and not just to sound positive. 


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