Ilona Esterina, Antara, Jakarta – An economist from the Institute for Development of Economics and Finance (Indef), Didik J. Rachbini, has expressed concern about the significant budget deficit projected in the 2025 Draft State Budget (RAPBN).
The proposed deficit of Rp616.2 trillion, or approximately 2.53% of GDP, is expected to pose challenges for Prabowo Subianto's incoming administration.
Didik warned that the substantial deficit would likely need to be financed through increased debt. "This is huge and inevitably needs to be covered with debt. During the ten-year administration of Jokowi, the debt policy has indeed been reckless, leaving a burdensome legacy for Prabowo's administration," he said in a written statement received by Tempo on Sunday, August 18, 2024.
The economist also highlighted the difficulties Prabowo and Gibran Rakabuming Raka's administration will face in reducing debt dependence due to their numerous political promises. He predicted a continued rise in government bond issuance, which could negatively impact the macroclimate by pushing up interest rates.
Indef's macroeconomic and financial researcher, Riza Annisa Pujarama, also emphasized the growing debt burden. According to the July 2024 APBN Performance and Facts report, government debt reached Rp8,444 trillion, an increase of Rp91 trillion from the previous month. The debt ratio also rose to 39.13% of GDP, nearing the 40% threshold.
Riza warned that high debt withdrawals could lead to increased debt interest payments. He noted that Indonesia's bond yield is the highest in ASEAN and the second highest in Asia, at 6.7070%. Despite government efforts to lower this yield, it remains a significant future burden.
Meanwhile, the Special Staff of Finance Minister Sri Mulyani for Strategic Communication, Yustinus Prastowo, previously responded to the rising debt. He stated that the government is taking proactive measures to address global uncertainty through flexible and opportunistic debt withdrawals.
He maintained that Indonesia's debt-to-GDP ratio remains moderate. The government projects a ratio of 38.80 percent by the end of 2024. "The government and the DPR ensure that debt planning as part of the APBN policy is being conducted carefully and with consideration for both global and domestic dynamics," he stressed.
As of the first half of 2024, the government has issued new debt worth Rp214.69 trillion, consisting of government securities at Rp206.18 trillion and loans at Rp8.1 trillion.