Debt management is continuing to be carried out carefully and measurably by maintaining the optimal interest rate, currency, liquidity, and maturity risks so that the state budget can remain healthy, credible, and sustainable.
"Government carries out funding through debts to meet the state budget funding needs when state revenue is not yet fully able to fund all state spending or when investment funding is needed," Irawan said in a statement released by the ministry on Saturday.
During the 2014–2019 period, the government's debt-to-GDP (gross domestic product) ratio stood in the range of 24.68–30.23 percent.
The figure rose at a moderate rate, especially to support the acceleration of infrastructure development.
Despite the significant increase in spending due to the COVID-19 pandemic, the government succeeded in controlling the rate of increase in government debt from 2021 until now.
In 2023, government debt was recorded at 39.21 percent of the GDP. Indonesia's debt ratio was lower than Malaysia's (67.3 percent), China's (83.6 percent), and India's (82.7 percent) in 2023.
As of July 2024, the debt ratio declined to 38.68 percent, far from the threshold of 60 percent set in Law Number 17 of 2003 on State Finance.
Irawan noted that the government's debt structure is categorized as healthy.
As of July 2024, the government's debt maturity profile has been considered quite safe with a weighted average maturity of eight years.
In terms of composition, government debt is dominated by domestic state securities (SBN), accounting for 70.49 percent of the debt; foreign currency SBN, 17.27 percent; and loans, 12.24 percent.
"The government continues to push the SBN market to be more efficient so that it can increase the resilience of Indonesia's financial system against economic and financial market shocks," he said.
He further said that the government's commitment to maintaining fiscal stability has also been acknowledged by an international institution.
According to the International Monetary Fund (IMF), Indonesia has shown strong fiscal discipline, providing enough fiscal space to anticipate future risks while still continuing to push economic growth.
The IMF has projected that Indonesia's debt will continue to decline to reach around 38.3 percent in the medium term, driven by cumulative interest-growth differentials in particular.
To this end, the government is continuing to make efforts to reduce the debt-to-GDP ratio through the optimization of state revenue by carrying out tax reform, natural resource management reform, and measured fiscal incentives.
"In the 2025 draft state budget, debt financing (net) is planned at Rp775.9 trillion (around US$50.37 billion), prioritized to support the acceleration of economic transformation that is inclusive and sustainable," he said.
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Translator: Bayu Saputra, Raka Adji
Editor: Azis Kurmala
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