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STRATEGIC ASSESSMENT. Jakarta. Finance Minister Sri Mulyani Indrawati has said that the International Monetary Fund’s (IMF) call for governments around the world to reduce foreign debt was irrelevant to Indonesia, because the country’s debt-to-gross domestic product (GDP) ratio was low.
“Indonesia’s debt-to-GDP ratio is only 30 percent. This is low [compared to] the international standard,” Sri Mulyani said on mid of January 2019. She also highlighted Indonesia’s good macroeconomic condition: economic growth above 5 percent, 3 percent inflation and a state budget deficit of 1.76 percent.
“Meanwhile, Indonesia’s economic growth is more than 5 percent, while the state budget deficit is less than 2 percent. Therefore, the [IFM’s call] is irrelevant to Indonesia,” she said. Sri Mulyani said that the IMF’s call addressed only those countries with a high debt-to-GDP ratio.
“There are advanced countries, like those in Europe, whose debt-to-GDP ratio reach 60 percent, 80 percent, even 100 percent. Such countries need to undertake fiscal consolidation,” she said. “There are countries with a debt-to-GDP ratio of above 60 percent and a state budget deficit of 2 percent, like Italy.” She added that some emerging economies had a debt-to-GDP ratio of more than 40 percent.
Sri Maulyani said that such countries needed to manage their fiscal balance by reducing their state deficit and debt, but such a policy had to be implemented carefully so as not to slow economic growth.
I think the International Monetary Fund’s (IMF) call for governments around the world to reduce foreign debt is early warning including for Indonesia, because of that the government should be taken deep attention o”n the seriously and dangerously problem.
Many scholars and an economic pundits in Indonesia are predicted the amount of foreign debt Indonesia ought to make Indonesia’s foreign debt trap. The government in their efforts to pay country debt recently makes several public policy which had been analysed as “colonialism policy” because those policy can reduce people’s welfare in Indonesia amid the rising of all of prices of goods and services in Indonesia.
I think during the election year, we can understand related to Finance Minister statement, because the worse of government’s debt and the slumpdown of Rupiah exchange rate has been worrying Jokowi’s administration.
The writer is Cersia’s CEO