The Center of Economic and Law Studies (Celios) has raised concerns about Indonesia’s significant debt that is set to mature during the early years of Prabowo Subianto’s presidency, reaching an estimated Rp700 trillion to Rp800 trillion (Rp45-52 billion).
Celios Executive Director, Bhima Yudhistira, pointed out that the bulk of this debt consists of government bonds (SBN), which present particular challenges in repayment.
“The main issue with this maturing debt is that most of it is in the form of SBN, or state securities,” Bhima told a Celios-organized discussion on Thursday, September 12, 2024.
He emphasized that renegotiating these debts would be particularly difficult, given the wide range of creditors, including financial institutions, households, banks, and even foreign investors from various countries.
While renegotiation is somewhat easier for government loans, Bhima noted that their portion is smaller compared to SBN.
This situation is likely to increase the fiscal burden passed down from President Joko Widodo to Prabowo Subianto’s administration.
Public Policy and Economic Researcher at Celios, Achmad Hanif, called for comprehensive reforms to ensure fiscal sustainability in the future.
“Fundamental changes in budget allocation and priority management are essential for Indonesia to better navigate its fiscal challenges,” Hanif said.
A recent Celios report titled 10 Fiscal Challenges Inherited from Joko Widodo highlighted that Indonesia’s debt financing surged by 203.39%, from Rp255.73 trillion in 2014 to Rp775.87 trillion projected for 2024.
The report also noted a significant 58.42% increase in the debt-to-GDP ratio from 2014 to 2023, with the highest spike of 30.46% occurring between 2019 and 2020 due to the pandemic.
Celios’ Public Policy Director, Media Wahyudi Askar, also emphasized that while Indonesia’s debt-to-GDP ratio is still below the 60% limit, the government has been using this gap to argue that the country’s debt remains manageable.
However, Askar cautioned that relying on this margin may not fully reflect the long-term risks to the economy.
