REPUBLIKA.CO.ID, JAKARTA -- JAKARTA -- The Finance Ministry said the government's foreign debt rose to Rp4,034.8 trillion by the end of February, 2018, but it dismissed default on repayment. Director of Strategy and Portfolio of Financing Schneider Siahaan said here on Thursday there is no cause for too much worry about default. 

"Foreign debts would be prudently and properly managed," Schneider said.

He said the government's foreign debt ratio is still in a safe level at 29.24 percent of the Gross Domestic Product (GDP) well below the maximum level of 60 percent of the GDP as regulate under the State Financial Law No. 17/2003.

"The debt will continue to increase as long as our budget is deficit. What we do is to manage the debt properly to prevent default," he said. 

Giving an illustration, he said in 2018, state revenues are estimated to reach Rp1,894 trillion as against government's debts of Rp4,034 trillion and that the government has nine year before the debt are due for repayment. 

Also read: Indonesia's foreign debts up 5.5 percent as of May 2017

Roughly the government would need to set aside Rp450 trillion to service the debts every year, he said. 

"If we have a revenue of Rp1,894 trillion as against debt servicing of Rp450 trillion every year, could we or could not we repay? Yes we could . That is what we call management," he said. 

Schneider said certainly the government debts could be fully repaid depending on the budget policy. "As for when the debts are to be fully repaid, would depend on budget policy. If the annual revenues are Rp1,800 trillion we just set aside Rp500 trillion of the revenues to service the debt. In 8 years the debt would be fully repaid," he said. 

Based on state budget figures in March 2018, the government's debts were still dominated by state bonds that reached Rp3,257.26 trillion or 80.73 percent of the total debt. Bonds in rupiah denomination were highly dominant contributing around Rp2,359.47 trillion to the total debts with bonds in foreign exchange accounting for 18.11 percent or Rp897.78 trillion.

Loans accounted for 19.27 percent or US$777.54 trillion of the government's debts. The loan debts include foreign loans making up 19.13 percent or Rp771.6 trillion consisting of 8.21 percent or Rp331.24 trillion in bilateral loans.

Multilateral loans made up 9.82 percent or Rp396.02 trillion, commercial loans 1.07 percent or Rp43.32 trillion and supplier loans 0.03 percent or Rp1.17 trillion. Domestic loans reached Rp5.78 trillion or 0.14 percent.

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