Next Year, Govt Plans to Add Rp300 Trillion Debt

medcom.id, Jakarta: President Joko Widodo's administration has proposed an addition of debt portion of Rp300 trillion for the 2016 State Budget Plan.
 
The proposal was mentioned by the Director General of Risk Financing and Management of the Financial Ministry, Robert Pakpahan, during the work committee meeting (Panja) between the government and the House of Representative's Budget Committee. Robert explained the additional debt is needed to close budget deficit, which is expected at the level of 1.7-2.1 percent.
 
"The government has not yet obtained specific numbers of the needs on debts for the following year. But there are rough drafts," Robert explained during the meeting at the Parliamentary Complex, Senayan, South Jakarta, Wednesday (6/24/2015).

Robert explained if next year's deficit is at that particular level, then the government needs to break it even both from debts or non-debts financing. Should the 2016 GDP reaches Rp12,000 trillion, then there should be an addition of debts as much as Rp250 to 300 trillion.
 
"The additional debts of Rp250 to 300 trillion is not fixed as the government is boosting infrastructure developments and others," he stated.
 
The debts financing policy in 2016, as explained by Robert, comprise of the following: First, controlling the debt ratio towards GDP. Secondly, optimizing the role of public in fulfilling the needs of funding and conducting in-depth domestic bonds market. Third is to direct debt utilization to productive activities, such as project based Sukuk publishing.
 
Fourth is to utilize foreign loan selectively, especially for infrastructure and energy sectors. Fifth, enhancing the utilization of loan facility as an alternative of financing instrument. Sixth, conducting active debt management within the framework of asset liability management (ALM).
 
Moreover, the policy considered the following issues, first is the debt payment capabilities. Second, the ability to absorb loans according to plan or target. Third, utilizations directed to productive activities and provide optimum contribution to domestic economy, such as the acceleration of infrastructure developments.
 
Fourth is the efforts to control debt ratio against GDP at a safe level. Fifth, the effort to minimize cost of borrowing at a controlled ratio, and sixth is the effort to maintain macro balance. (Eps)
 
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