Purbaya Says Indonesia’s Debt Level Remains Sustainable

Finance Minister Purbaya Yudhi Sadewa said Indonesia’s government debt remains under control despite surpassing Rp8,000 trillion, or approximately US$443.3 billion.

He said the country’s debt remains manageable because its debt-to-GDP ratio is relatively low and its sovereign credit rating from international agencies remains stable.

Speaking at the Presidential Palace in Jakarta on Wednesday, Purbaya emphasized that a country’s debt should be assessed in relation to the size of its economy rather than by its nominal value alone.

“A country’s debt should always be viewed relative to the size of its economy, not simply by the total amount owed,” he said.

According to Purbaya, the debt-to-GDP ratio is the standard indicator used to assess a country’s fiscal sustainability.

He noted that Indonesia’s debt-to-GDP ratio stands at around 40 percent, well below the 60 percent ceiling set under the country’s fiscal framework.

“In terms of fiscal limits, government debt should remain below 60 percent of GDP. We are currently at around 40 percent, which is comfortably within that threshold,” he said.

Purbaya also compared Indonesia’s debt level with those of several advanced economies, which have significantly higher debt-to-GDP ratios.

He said the United States has a debt-to-GDP ratio of more than 100 percent, Germany exceeds 60 percent, Singapore stands at around 175 percent, and Japan records approximately 275 percent.

Despite the increase in nominal debt, Purbaya stressed that Indonesia’s fiscal position remains strong and there is no reason to doubt the country’s ability to meet its debt obligations.

He pointed to Standard & Poor’s decision to maintain Indonesia’s sovereign credit rating at BBB with a stable outlook as evidence of the country’s sound fiscal condition.

According to Purbaya, rating agencies would revise the outlook or downgrade the rating if they believed Indonesia’s capacity to service its debt had materially weakened.

“If we were considered unable to meet our obligations, the outlook could be revised to negative or our credit rating could be downgraded,” he said.

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