Indonesia disburses US$4.1 billion to support 14.9 million MSMEs

Indonesia’s finance minister has reaffirmed that the nation’s debt-to-GDP ratio continues to remain safely below the statutory limit, despite a slight increase over the past year. Speaking during a parliamentary session on Tuesday, Purbaya Yudhi Sadewa stated that the ratio climbed to 40.54 percent in 2025 from 39.81 percent in 2024. This figure still falls significantly under the 60 percent threshold set by the government as a safety benchmark. The rise in the debt-to-GDP ratio reflects ongoing government borrowing to fund development projects and maintain economic stability amid global financial uncertainties. However, officials have emphasized that the country’s fiscal policies continue to prioritize long-term sustainability. During his remarks, Sadewa outlined a strategic approach aimed at balancing growth with responsible fiscal management. He highlighted four core pillars guiding future debt control: restoring a primary fiscal surplus, boosting state revenues, enhancing the efficiency of public expenditures, and implementing active debt management techniques such as refinancing, buybacks, and loan conversions. According to data released by the Directorate General of Financing and Risk Management, total government debt reached Rp9,920.42 trillion, approximately US$608.6 billion, as of March 31, 2026. This corresponds to a debt-to-GDP ratio of 40.75 percent, slightly above the 2025 figure but still comfortably within acceptable limits. The ministry has consistently maintained that its debt levels are more cautious than those of several neighboring countries. In a separate media briefing held on May 11, Sadewa compared Indonesia’s fiscal prudence with that of other nations. He noted that Singapore’s debt-to-GDP ratio stands at approximately 180 percent, far exceeding Indonesia’s level. Malaysia, meanwhile, operates at around 60 percent, which is also higher than Indonesia’s current standing. The minister further pointed out that even major developed economies such as the United States and Japan face much higher debt burdens, reinforcing Indonesia’s relatively stable financial position. Sadewa stressed that these comparisons underscore the effectiveness of Indonesia’s fiscal strategies. “We are among the most prudent compared with countries around us,” he remarked, highlighting the importance of maintaining disciplined fiscal practices in the face of evolving economic conditions. His comments come amid growing global concerns over rising sovereign debt levels, particularly in emerging markets. Lawmakers had previously raised questions about the implications of the rising debt ratio, prompting Sadewa to elaborate on the government’s plans for fiscal restraint. He assured representatives that the proposed measures would ensure continued support for development initiatives without compromising financial stability. The strategy includes a gradual reduction in reliance on external financing and an emphasis on domestic resource mobilization. Looking ahead, the government aims to keep the debt-to-GDP ratio in check while ensuring sufficient funding for critical sectors such as infrastructure, healthcare, and education. Officials have indicated that they will monitor macroeconomic indicators closely and adjust policies as needed to align with changing circumstances. The upcoming months will likely see further discussions on how best to balance growth-oriented investments with fiscal discipline.