MPR asks government to explain use of debts

MPR asks government to explain use of debts

Deputy Chairman of the People`s Consultative Assembly (MPR) Hidayat Nur Wahid (ANTARA /Wahyu Putro A)

Padang, W Sumatra (ANTARA News) - Deputy Chairman of the People`s Consultative Assembly (MPR) Hidayat Nur Wahid has asked the government to evaluate the use of debts.

Increase in debts was not proportional with the improvement of the people`s welfare, Nur Wahid said in the district of Padang Pariaman, West Sumatra, on Sunday.

"The question is that what the debt has been used for. Debts have continued to increase but there is no improvement in the people`s welfare. The government has to evaluate this," he added.

He said according to the Institute for Development of Economics and Finance (Indef), now the country had debt of around Rp7,000 trillion including debts of the private sector.

The big debt has given no benefit to the people, and unemployment remained high, he said.

Earlier Finance Minister Sri Mulyani Indrawati said the increase in the nominal value of debts is not necessarily equivalent to capital or infrastructure spending.

"The statement that `additional debt was not productive as it is not followed with equal amount for capital spending` is a wrong conclusion," Sri Mulyani said.

In the 2018 state budget, capital spending accounted to 25 percent of the total transfers of Rp766.2 trillion to the regions, and capital spending is not the only fund for infrastructure spending, she went on to explain.

"Good economists know very well that the quality of good, efficient, and clean institutions is the type of `soft infrastructure` which is vital for the advancement of an economy," the minister said.

The Minister said disciplined fiscal policy, which has been consistently adopted by the government, does not mean that the government is against using debts.

She called on all to stop worrying about the government`s debts, saying the prudent debts management, has been strictly maintained.

A number of observers and politicians have talked about mounting debts, raising fears as if the country is about go bankrupt and fall apart.

Sri Mulyani said the government has adopted disciplined fiscal policy that the debt ratio to the GDP remains within the limit allowed by the law.

"Indonesia is among countries having law on fiscal discipline overseeing the implementation of the state budget and consistent in execution," she said.

The government`s consistency in adopting fiscal discipline is obvious from the decline in state bond yield from 7.93 percent in December 2016, to 6.63 percent in mid March 2018 for a 10-year bonds.

The achievement is not an easy one after the U.S. Central Bank (The Fed) raised its fund rate by the end of 2016 continuing three times in 2017, she said.

Earlier the Finance Ministry said the government had no difficulty in dept repayment as the debt ratio to GDP was still safe at 29.24 percent.

The ratio is still lower than those of economies of equal level with Indonesia like Vietnam with a ratio of 63.4 percent, Thailand 41.8 percent, Malaysia 52.7 percent and Brazil 81.2 percent.