DIGIVESTASI - Indonesian people are increasingly concerned about the size of the country's debt, which has now reached Rp8,500 trillion. Complaints and concerns have been expressed through social media such as X (formerly known as Twitter) and Instagram. The question being asked is, when can Indonesia be truly independent from debt dependency?

To the public, the government's debt figure feels very large. As of July 2024, government debt was recorded at IDR 8,502.69 trillion, an increase of around IDR 57.82 trillion in just one month.

However, despite the increasing debt figure, the ratio of debt to Gross Domestic Product (GDP) as of July 2024 only reached 38.68%, a slight decrease compared to the ratio in June 2024 which amounted to 39.13% of GDP.

On the other hand, according to data from Bank Indonesia, Indonesia's foreign debt as of June 2024 reached US$408,620 million or equivalent to IDR6,537.92 trillion (using an exchange rate of IDR16,000/US$).

Based on data from Bank Indonesia, the financial services and insurance sector is the largest recipient of Indonesia's foreign debt, with a total value of US$77,503 million or equivalent to Rp1,240.05 trillion. 

In addition, the manufacturing or processing industry sector also absorbed most of the foreign debt, with a total of Rp778.09 trillion.

In the division of Indonesia's foreign debt by borrower group, there are two main categories: government & central bank, and private sector. Loans from the private sector are further divided into several types, namely banks, non-bank financial institutions, and non-financial entities.

The use of foreign debt by the private sector in Indonesia is mostly allocated for working capital and investment needs. The value of debt used for working capital was recorded at US$94,283 million or equivalent to Rp1,508.53 trillion. Meanwhile, debt allocated for investment purposes reached US$83,724 million or around Rp1,339.58 trillion.

**When will Indonesia be debt-free? **

The question of Indonesia's ability to become debt-free has yet to find a definitive answer. This is due to the country's condition, which is currently still in the infrastructure development phase.

According to information from the Ministry of Finance's official website, debt is taken on to catch up on infrastructure and connectivity. These problems are considered to be the cause of the high economic costs borne by society.

To address this, the government implemented an expansionary fiscal policy with expenditures greater than revenues, in order to boost economic growth through infrastructure improvements and the improvement of the quality of human resources.

When government needs are very high and revenues are inadequate, the difference is usually covered by debt. Debt is used to fulfill development needs that are urgent and cannot be delayed.

Current and long-term development is expected to increase the amount of new investment, competitiveness, and purchasing power. Ultimately, future tax revenues are expected to be used to pay off the debt taken on today.

INGGRIS

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