Debt Reaches Rp9,000 Trillion, Government Urged to Strengthen Economic Diplomacy
The fiscal space within the State Budget (APBN) is considered increasingly limited due to the rising burden of government debt and persistent structural economic challenges facing Indonesia. To maintain national economic resilience, strategic measures are needed through strengthened fiscal discipline, economic diplomacy, and acceleration of real sector transformation.
Member of House Commission XI, Kamrussamad, revealed that total government debt has now breached Rp9,000 trillion, creating significant annual obligations for principal and interest payments. With an average interest rate of around 6 percent, this burden exerts considerable pressure on the state budget posture.
“This situation demands the government take strategic steps through economic diplomacy, particularly in negotiations with international creditors regarding interest rates and loan tenors amidst global uncertainty,” Kamrussamad stated in Jakarta on Thursday (18/6).
Despite the increasing debt burden, Kamrussamad noted a positive development in the financing structure. Currently, the composition of debt is increasingly dominated by domestic investors through ownership of Government Securities (SBN). This indicates a growing role for the public in financing national development.
He also stressed the importance of maintaining fiscal discipline to keep the budget deficit below the safe threshold of 3 percent of Gross Domestic Product (GDP). Based on first-quarter data this year, the state budget deficit improved from 0.91 percent to around 0.8 percent.
“Indonesia’s debt ratio currently stands at around 38.6 percent of GDP. This figure must be maintained so it does not exceed the safe limit, ensuring fiscal stability is preserved,” he asserted.
Echoing this sentiment, Trimegah Sekuritas Indonesia Chief Economist Fakhrul Fulvian assessed that the rupiah’s depreciation over the past decade reflects unresolved structural issues. He recorded a depreciation of around 26 to 31 percent in less than ten years.
However, Fakhrul views the massive infrastructure development and Special Economic Zones (KEK) as a strong foundation to boost the manufacturing industry and improve the distribution efficiency of MSME products to export markets. He cautioned that the main challenge ahead is improving the quality of state spending.
“Much of state spending is merely oriented towards budget absorption, not quality. Evaluation of absorption patterns is crucial to ensure government expenditure is more effective and accountable,” Fakhrul explained.
He expressed optimism that Indonesia possesses significant capital for sustainable growth through the energy and food sectors, supported by abundant natural resources and a tropical climate enabling year-round productivity. Well-targeted synergy between fiscal and monetary policies is key to optimising this potential.