Although we have a deficit, we can still owe, but that is to save the society and economyJakarta (ANTARA) - Finance Minister Sri Mulyani Indrawati stated that the government's debt was a step to save society and to help the community to prosper in the midst of the COVID-19 pandemic crisis.
"Although we have a deficit, we can still owe, but that is to save the society and economy," the minister stated during the CNBC Economic Outlook 2022 in Jakarta, Tuesday.
Indrawati explained that the debt step was taken on account of the fact that the state budget was not healthy.
The unhealthy state budget is caused by state revenues that dropped by 18 percent, as business and economic activities had stalled due to restrictions on mobility.
On the other hand, the government has to support the needs of people experiencing health threats and are being laid off through state spending.
This is the background for the government to widen the deficit, from a maximum of three percent of the gross domestic product, which was then allowed to be above three percent in line with Law No. 2 of 2020.
"That is why we say our deficit can be above three percent, and this is still below 60 percent of the total state debt allowed by the state finance law," Indrawati stated.
The minister said that results of the debt comprised the capacity of health facilities, including providing hospitals, making isolation places, and providing PCR, protective equipment, ventilators and vaccines.
The government will then bear the costs for people affected by COVID-19 that require hospitalization.
The budget reaches around Rp220 trillion, Indrawati remarked.
Moreover, the government provides social support in the form of the Family Hope Program (PKH), basic food assistance, direct cash assistance, assistance for MSME actors, microcredit program (KUR), and so on.
However, Indrawati stated that as economic recovery continues to strengthen, the debt will become lower, considering that the government can pay off debt when state revenues begin to rise.
Revenues, which had dropped 18 percent in 2020, began to rise to above 20 percent last year and until the second week of this year were already above 30 percent.
"We can get revenue when the economy recovers. That is what we use to pay debts," she stated.
The minister ensured that Indonesia's debt was still quite low as compared to the G20 member countries, from India as an emerging country to the United States, Britain, France, and Germany as developed countries.
"Regarding 40 percent or 41 percent debt (Indonesia), advanced countries, such as the US, France, England, and Germany, are all already above 60 percent and even above 100 percent," she remarked.
Government debt until the end of January 2022 totaled Rp6,919.15 trillion, an increase of Rp10.28 trillion as compared to the previous month or Rp686.01 trillion compared to the same period last year.
This nominal debt increased, but the debt-to-GDP ratio fell to 39.36 percent as compared to 41 percent in December 2021 or 40.28 percent in January 2021.
Translator: Astrid F, Azis Kurmala
Editor: Fardah Assegaf
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