TEMPO.CO, Jakarta - Director of Islamic Financing at Finance Ministry, Suminto, stated that Indonesia under the leadership of President Joko Widodo or Jokowi has no difficulty on the management of state debt. Suminto argued the country would not go bankrupt because the state debt reached up to Rp4,034 trillion per February 2018.
“I think [Indonesia] won’t fall into bankruptcy. If people questioning the debt in Jokowi’s administration, there is no problem,” he said in a discussion meeting in Jakarta, Thursday, April 12.
The reason is, Suminto explained, the government has well managed the debt and has given assurance to cover it. In addition, Indonesia's debt-to-GDP (gross domestic product) ratio valued at 29.2 percent, far from the set limit at 60 percent. “The government has spent the debt in productive sectors,” he added.
Suminto further mentioned that since the issuance of Law No. 17/2003 on state finance, State Budget (APBN) has yet experienced a deficit, which was recorded at below 3 percent limit standard. Thus, it shows that Indonesia is discipline in managing fiscal.
“Unfortunately, European Union countries were negligence in the fiscal management set as the best practice in drafting state financial regulation, for example, Greece that declared its bankruptcy,” said Suminto.
Suminto then compared the country’s debt-to-GDP ratio to other countries such as Japan that owned 239 percent GDP debt; the United States at 107 percent; Brazil at 78 percent, India at 70 percent, and Malaysia 56 percent.
“Compared to other developed countries or those with the same level as Indonesia, our state debt is still in the safe zone,” Suminto asserted.