Opposition, Debt and Indonesian Economy

JAKARTA, KOMPAS.com – Talk about government debt is not new. A few months after the start of 2018 many figures, as opposition from the government, pay attention to criticizing government debts that are considered unsafe or unnatural.

Not a few of the figures directly criticized Minister of Finance Sri Mulyani Indrawati as President of Joko Widodo who acted on public finances through the government budget.

To understand the debate, let's look back at who the characters are and what their opinion is, complete with an explanation from Sri Mulyani.

1. Rizal Ramli

The economist and the person who served at various positions in the previous government initially expressed his opinion on the trade deficit at the public hearing (RDPU) in Commission XI, last March 2018, in the House of Representatives.

The Rizal spotlight also extended to the broader condition of the current account deficit, the amount of principal payments and debt interest for this year, as well as the primary balance in the APBN.

Rizal also shared his opinion via his Facebook account, Rizal Ramli, in which Indonesia's debt was called a yellow light. He compared the debt management of Indonesia by digging the gap because of the gap primary balance negative, debt to service ratio (debt / income ratio) was 39 percent, and tax ratio only 10 percent.

"Fiscal management is not doing cautiously (trade-off) trade accounts, service accounts and the current accounts are all negative, which is one of the main reasons why the Rupiah exchange rate continues to fall as well as the US Fed rate factor. economically manage? erg, " this is partly the status of Rizal on Facebook.

Also read: Answer to Rizal Ramli about Indonesian debt

When the question of debt became more prominent, Rizal expressed his desire for an open debate with Sri Mulyani. His wish was based on President Joko Widodo's statement in an interview with Najwa Shihab, who invited someone to argue with the Minister of Finance as long as he used valid data.

In July, Rizal assessed that Indonesian economic status had risen from the previous yellow lights to red lights. Rizal said the statement in the Indonesia Sekber dialogue in Jakarta in July 2018.

In his criticism, Rizal regarded the Indonesian economy as more vulnerable from two indicators. the first place, Credit Default Swap (CDS) or financial market views on the credit risk of an entity.

Second, from External vulnerability indicator (EVI), which is an indicator of the vulnerability of a country, given the ratio between short-term and long-term foreign debt to maturity and foreign deposits of a year outside the foreign exchange reserves.

2. Fadli Sun.

Vice-chairman of the Indonesian House of Representatives Fadli Zon via his Twitter account, @fadlizon in May 2018, commented on the Rupiah exchange rate and government debt. According to Fadli, the economy was already in an early stage of the crisis because the government failed to maintain the stability of the Rupiah exchange rate.

The impact of the weakening of the Rupiah exchange rate against the US dollar is an increasingly debilitating debt.

"This condition is far from what was promised in 2014. By way of comparison, the Rupiah's exchange rate is currently 38 percent lower than the previous campaign promises, which shows that the government calculation is far from realistic and that the government has not been able to keep our rupiah . " one of the cuitan of Fadli.

Also read: Answering Twitter Fadli Sun about weakening Rupiah

3. Prabowo Subianto

Geripra faction leader Prabowo Subianto said in June 2018 that the national debt was very dangerous.

Prabowo even mentioned that there was almost Rp.9 trillion in government debt, combined with debts from financial institutions and BUMN debts.

Read also: Answers on Prabowo about debt

4. Zulkifli Hasan

Recently, MPR chairman Zulkifli Hasan gave a speech at the annual meeting of the MPR of the Republic of Indonesia on Thursday (16-08-2018), which showed that the principal of the government debt due this year, Rp. 400 trillion.

The amount is 7 times larger than the village fund and 6 times more than the health budget.

Also read: Chairman of the MPR regarding the main payment of the debt, This is the statement of Sri Mulyani

The answer from Sri Mulyani

Sri Mulyani denied all statements or conclusions of the figures accompanied by lengthy statements. The full explanation can be seen on the official Facebook account of Sri Mulyani, in Sri Mulyani Indrawati.

In response to Rizal Ramli's statement, Sri Mulyani said that the government continued to reduce the APBN deficit and the primary balance. Since 2012, the government has experienced a deficit on the primary balance sheet that gradually declined from minus Rp, 142.5 trillion in 2015 to minus Rp 121.5 trillion in 2017.

The government will certainly also focus on improving export performance and increasing investment, so that the current account deficit does not increase, including the trade balance that can be a surplus.

With regard to the weakening of the Rupiah and its impact on government debt, Sri Mulyani said, Fadli Zon said, that debt is an integral part of the overall state budget structure. Debt is also a policy that is taken as a result of a deficit, because the expenses are greater than the income.

Also read: Rizal Ramli answers to the economy of the red light in Indonesia

"Debt is an alternative financing that also requires approval from the House of Representatives via the Budget Agency After the Banggar was approved, the RAPBN was brought to the plenary meeting of the PRD." During the plenary meeting of the PRD, chaired by elements of the DPR leadership, one of the vice-presidents was Mr Fadli Zon. The APBN is included in the APBN Act, "says Nufransa Wira Sakti, the Communications and Information Services Office of the Ministry of Finance, which represents Sri Mulyani.

Although the weakening of the rupiah has become inevitable because of global conditions and uncertainties in fiscal and monetary policy in the United States. Nevertheless, Sri Mulyani ensured that Indonesia's economic fundamentals remained strong, as the percentage of Rupiah's depreciation was still well below the currencies of other countries affected by the same case.

With regard to the Rp. 9000 trillion debts of Prabowo, it is stated that the correct amount of total debt Rp. 8.540 trillion. The face value consists of a public debt of Rp 4,060 trillion, a BUMN non-financial institution debt of Rp 630 trillion and a debt of BUMN from financial institutions (including state banks) of 3,850 trillion Rp.

The BUMN debt of financial institutions is Rp 3,850 trillion, most (80 percent) are third-party funds. Third party funds come from the public and companies that place money in banks to save or as a productive investment tool for the economy.

While the debt of non-financial institutions of the SOE is used to build infrastructure and to finance other productive activities of BUMN. BUMN debts are assets and liabilities that are separated according to the State Finance Act and are not automatically borne by the government.

Against the statement of Zulkifli Hasan, Sri Mulyani called it explicitly politically charged and misleading. On the basis of the information from the Ministry of Finance, the payment of the principal sum of 2018 Rp was 396 trillion, of which 44 per cent was due in the period before President Joko Widodo.

The total debt is also not as large as that of Zulkifli. Sri Mulyani made village fees and health budgets larger and on the other hand, the growth of debt financing even fell to minus 9.7 percent this year.