Indonesia's national debt has reached alarming levels, raising concerns over the country's financial stability, economist Anthony Budiawan has warned. 

According to him, the government's growing reliance on debt could pose serious risks to the economy, especially amid global economic uncertainties and rising interest rates.

Budiawan highlighted that the debt-to-GDP ratio has surged in recent years, surpassing the internationally recognized safe threshold. He noted that Indonesia’s total debt has now exceeded Rp8,000 trillion (US$482 billion), a sharp increase compared to previous years. This signals potential difficulties in repayment and could lead to higher borrowing costs in the future.

“The current administration seems to be overly dependent on debt without a clear strategy for repayment,” Budiawan said as quoted in a statement on Friday, March 28,2025.

He further pointed out that debt servicing costs are rising, with interest payments alone consuming a significant portion of the national budget, limiting the government's ability to allocate funds for essential public services such as healthcare, education, and infrastructure development.

Experts fear that continued accumulation of debt without significant economic growth may push Indonesia into a financial crisis.

Budiawan emphasized that a lack of fiscal discipline could increase the country's vulnerability to external shocks, particularly in the face of a weakening rupiah and global economic slowdown.

Some analysts suggest that the government should prioritize structural reforms, enhance tax collection efficiency, and reduce unnecessary expenditures to mitigate the risks. They argue that increasing revenue streams and implementing stricter fiscal policies are crucial to ensuring long-term economic stability.

Despite these warnings, the government maintains that Indonesia's debt remains manageable and within safe limits. Officials argue that borrowing is necessary to support infrastructure development, social programs, and economic recovery efforts post-pandemic.

Finance Minister Sri Mulyani has repeatedly assured the public that debt management strategies are in place to prevent financial distress.

Budiawan, however, remains skeptical. “Without proper fiscal discipline and a clear debt reduction plan, Indonesia could face severe economic consequences, including a potential downgrade in credit ratings and a loss of investor confidence,” he concluded.