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State debt projected to hit Rp500tn in 2024: Finance ministry responds

Tempo - May 23, 2023

Amelia Rahima Sari, Jakarta – The Finance Minister's special staffer for strategic communications, Yustinus Prastowo, stated that the government debt principal and interest rates differ each year.

He made the statement in response to the Center of Economic and Law Studies or Celios (Indef) economist Bhima Yudhistira's prediction that the state debt burden will exceed Rp500 trillion in 2024.

"[The amount of the debt principal and interest rates] are still ongoing this year, so we can't determine it yet," Prastowo said in a written statement, Tuesday, May 23, 2023.

According to him, the Supreme Audit Agency (BPK) is currently auditing state debts in 2022. When asked about the prediction, he said the Finance Ministry's Director General of Financing and Risk Management, Suminto, had explained it at the press conference on the state budget held on Monday, May 22, 2023.

"Please ask him (Suminto)," Prastowo shortly said.

Suminto has not yet replied to Tempo's questions until now. During yesterday's press conference, he explained the issuance of Government Securities or SBN and the issue of the hike in the United States debt ceiling.

"We have not seen a significant impact on global financial markets thus far, including spillover to our SBN market," he claimed.

Previously, an economist Bhima predicted that the debt burden would soar. Moreover, there is a tendency for the surge in interest rates which is still ongoing. "It is estimated that the government debt in 2024 could increase to Rp480-500 trillion, or up by around Rp40 trillion," Bhima told Tempo on Tuesday.

The addition of debt, he assessed, was inseparable from the need for state budget financing to complete infrastructure projects, bureaucratic spending (employees and goods), and cover maturing debts.

"If the increasing state debt burden continues to be set aside, it will narrow fiscal space and lead to a debt overhang (economic growth will slow down)," Bhima said.

Source: https://en.tempo.co/read/1729023/state-debt-projected-to-hit-rp500tn-in-2024-finance-ministry-respond