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Indonesia – INDEF: State Debt Has Yet Driven Economic Growth
TEMPO.CO, Jakarta – Institute for Development of Economics and Finance (INDEF) stated the increase of state debt was not equal to the economic growth. Whereas, in the last three years, the fund was allocated to infrastructure development.
“The debt is contradictory to our expectation; [we expected that] it can encourage national productivity and competitiveness as well as our independence. Its rapid increased in the last three years was for the counterproductive sector,” said INDEF Director Enny Sri Hartati at her office in Pejaten, South Jakarta, March 21.
Indef researcher Ahmad Heri Firdaus stated the debts used for Indonesia’s development was proved to be failed in strengthen the investment significantly. Thus, the state economic output is relatively stagnant.
“Even though the impact will not occur in a short period, at least it will boost the optimism in the investment sector,” said Heri.
Heri said that the Business Tendency Index and various surveys revealed that economic growth has not accelerated yet which caused the economic output growth stayed at five percent.
“It means that the debt growth in driving the economy is relatively low,” Heri added.
Indonesia’s gross domestic product (GDP) 2015 was recorded at Rp11,526 trillion and at Rp12,406 trillion in 2016 and continued to grow strong in 2017 up to Rp13,588 trillion. The average GDP reached 8.74 percent annually (YoY).
However, the increase of GDP was accompanied by the growth of state debt. Until 2015, the debt was recorded at Rp3,165 trillion and increased to Rp3,515 trillion in 2016 and Rp3,938 trillion in 2017. The year-on-year inflation rate was at 14.81 percent.
Meanwhile, as of February 2018, the debt has reached to Rp4,034.8 trillion or at 13.46 percent over the same period last year of Rp3,556 trillion. In the 2018 state budget, the total debt is 4,772 trillion.
“For the last 3.5 years, the national productivity has not encouraged, which lead to the rapid increase of debt from GDP and then the debt ratio which potentially ruin the economic stability in the future,” said Heri.
Government Securities (SBN) issued that the year to date state debt has reached Rp3,257.26 trillion or 80.73 percent of total government debt. The issuance was approximately at Rp2,359.47 trillion, denominated in Indonesian currencies.
Source: https://en.tempo.co/read/news/2018/03/21/056916872/INDEF-State-Debt-Has-Yet-Driven-Economic-Growth