Reaching IDR 8,444.87 Trillion, RI Will Enter a Deeper Debt Trap

JAKARTA – The current government debt condition is increasingly mounting. As of the end of June 2024 or semester I-2024, it has increased to IDR 8,444.87 trillion.

Quoting the July 2024 edition of the APBN Kita book, the government’s debt position in June 2024 increased by IDR 91.85 trillion from IDR 8,353.02 trillion in May 2024 (month-to-month/mtm).

With this debt position, the debt ratio as of the end of June 2024 was recorded at 39.13 percent of gross domestic product (GDP). The Ministry of Finance stated that this debt ratio remains consistently maintained below the safe limit of 60% of GDP according to Law No. 17/2003 concerning State Finance.

Economist from Paramadina University Wijayanto Samiri assessed that the government’s debt condition is already a yellow light or dangerous. This is because state revenues tend to stagnate while the deficit trend continues to widen.

“If we look at the trend of stagnant state revenues and actually below target, the deficit trend continues to increase and the debt value and interest rates continue to rise; then our situation is not encouraging,” Wijayanto told Sindonews, Saturday (3/8/2024)

He explained that in 2025 the government must pay interest on debt and principal of around Rp1,200-1,300 trillion, assuming state revenue of around Rp3,000 trillion. So the debt service ratio (DSR) becomes 43.4%, meaning state revenue to pay taxes and interest on debt.

“DSR above 30% is actually a yellow light,” he said.

“The condition in 2026 will almost certainly be the same or even worse. If not careful, DSR will easily jump to more than 50%, the interest on debt will be more expensive,” he added.

He predicted the trend of government debt interest rates that will continue to increase. This can be seen from the gap between the primary market SBN interest rate of around 6.4%, but in the secondary market for SBN with an equivalent tenor has reached 7.2% or even more.