IMPACT OF RUPIAH DEPRECIATION: COMPLETE DEBT RATIO

JAKARTA - For the first time since 2009, the ratio of government debt compared to gross domestic product (GDP) as of August 2018 broke at 30.31%. The swelling of the debt ratio was triggered by the impact of rupiah depreciation.

Although it is still below the baseline stipulated in the State Finance Law, which is 60%, the achievement has slightly missed the government's target of around 29%.

Ministry of Finance data shows that the total debt as of August 2018 reached Rp.4,363.19 trillion, up 12.3% compared to the total debt in August 2017 which reached Rp.3,825.7 trillion.

The largest debt composition was dominated by Government Securities (SBN) which reached Rp3,541.8 trillion or 81.18% of the total debt consisting of rupiah-denominated SBN worth Rp.2,499.4 trillion and foreign currency worth Rp1,042.4 trillion.

Meanwhile, the composition of the loan is only 18.82% or Rp.821.3 trillion of the total debt. The loan component comes from foreign loans worth Rp.815.05 trillion and the rest comes from domestic or Rp.6.25 trillion.

Minister of Finance Sri Mulyani assessed the amount of outstanding debt reaching 30.31% was the impact of weakening the rupiah. "We will continue to guard around that if there is a dynamic of exchange rate that changes the nominal value, especially foreign debt, we will adjust later because the position is not always a fix," he said.

Luky Alfirman, Director General of Financing and Risk Management at the Ministry of Finance, also explained that the swelling of outstanding government debt was caused by the depreciation of the rupiah which had depreciated by more than 8% since the beginning of the year.

The reason is that SBN with foreign currency denominations of the total outstanding is still quite high, around 23.89% of the total outstanding debt of Rp1,042 trillion. This number increased from last year by 22% or valued at Rp.841.79 trillion.

The government is aware of the potential for debt swelling from the impact of the weakening of the rupiah, so that the government gradually reduces the budget deficit so that there is no need to issue new debt.

Until the end of the year, the government will still issue state securities (SBN) of around Rp160 trillion.

"The performance of debt financing is quite on track, we see the debt in the APBN as of August is 68.72% of IDR274.33 trillion. The negative growth is [-18.49%], our financing continues to decrease," Luky said.

Indef Senior Economist Didik J. Rachbini assesses that Indonesia's economy is ill, this is reflected in the position of debt and deficits in the four main economic indicators.

"Indonesia is currently experiencing double critical illness in four areas, namely the service account deficit, the current account deficit, the trade balance deficit and at the same time the APBN deficit. These critical indicators are signs that the Indonesian economy can and may not enter the crisis, "he explained.