“We see that our debt (to-GDP ratio) remains below 40 percent, the lowest compared to developed countries which even (debt-to-GDP ratio) is above 100 percent, as well as (when compared to) other developing countries. So, relatively, (we are) still careful,” the minister informed at the “National Seminar on Indonesia’s Economic Outlook” in Jakarta.
Referring to Law Number 1 of 2003 on State Finances, the maximum limit for the debt-to-GDP ratio is 60 percent.
Hartarto said that so far, the debt has been utilized well, namely for infrastructure construction. However, he noted the high Incremental Capital Output Ratio (ICOR).
“We can still improve (the condition), but it surely needs extra effort. The management of construction conducted by the government, state-owned enterprises, and private companies should be improved,” he added.
“One factor is transportation. We must remember that (Indonesia) is an archipelago state, and there are no archipelago states as big as Indonesia,” he continued.
Furthermore, the coordinating minister noted the importance of infrastructure construction, especially in Eastern Indonesia, to bring down logistics and transport costs.
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He then outlined the target of reducing logistics costs to 8 percent by 2045.
“We have a target for transportation and logistics. In 2030, perhaps (we can bring down the costs to) 12 percent, but in 2045, we hope it will reach 8 percent,” Hartarto informed.
Indonesia’s fundamental economic performance is well-maintained amid global economic uncertainty.
The World Bank has projected that Indonesia’s economic growth will be maintained at 5 percent until it consistently stays at that level.
Meanwhile, Indonesia’s inflation rate is still relatively under control, Hartarto said.
The national inflation rate was recorded at 2.86 percent year-on-year in November 2023.
“This achievement comes from the President’s instruction, the synergy between fiscal, monetary, and real sectors, the public’s support, and fiscal policies that have become a responsive shock absorber for economic policies,” the minister explained.
“Monetary policies also play a strategic role in maintaining economic stability and supporting sustainable economic development,” he added.
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Translator: Bayu, Luthfia, Azis Kurmala
Editor: M Razi Rahman
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