Translator
Ricky Mohammad Nugraha
Editor
Laila Afifa
2 November 2022 23:24 WIB
TEMPO.CO, Jakarta – Representatives from the International Monetary Fund (IMF) on Tuesday implied that Indonesia’s sovereign borrowing costs are currently too high. They argue that the level is irrelevant to the government’s efforts to improve fiscal management.
Based on data from the Regional Economic Outlook Asia and Pacific IMF October 2022 edition, Indonesia is in the top 3 with the largest sovereign borrowing costs along with Bangladesh and India. The amount for the local currency yield is around 8 percent for a 10-year tenor.
IMF Senior Resident Representative for Indonesia James Walsh in his visit to Tempo headquarters on Tuesday implied that he would personally prefer a lower number than the current one.
The only way to lower the interest cost of that debt, James said, is to create a credible fiscal policy over a very long period of time. In a period of 10-15 years, Indonesia has been able to reduce its fiscal deficit to a low level.
The fiscal deficit or deficit in the Indonesian state budget (APBN) has been stipulated in Law No. 17/2003 concerning State Finances of a maximum of 3 percent of gross domestic product (GDP).
Taking into account the current fiscal policy, the government has been very careful for a long period of time. The level of government debt is also in accordance with the State Finance Law, which is below the level of 60 percent of GDP. According to James, the current borrowing costs should be even lower.
ARRIJAL RACHMAN
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