Indonesia’s Prabowo to allow debt-to-GDP ratio to reach 50%: Report

JAKARTA: Indonesian President-elect Prabowo Subianto will allow the world’s debt-to-GDP amount to increase to 50 per cent provided his administration may raise tax revenues, the Financial Times reported citing one of his closest advisers.

Hashim Djojohadikusumo, Prabowo’s brother and advisor, told the Financial Times in a London meeting that Indonesia may still maintain its investment-grade grade despite a rise in the debt-to-GDP ratio of 50 %.

” The concept is to increase the revenue and increase the debt level”, Hashim said in the post.

” We do n’t want to raise the debt level without raising revenue”, Hashim said, pointing to “taxes, excise taxes, royalties from mining and import duties”.

When contacted by Reuters on Thursday ( Jul 11 ), Prabowo’s economic team in Jakarta declined to comment on the interview.

Prior to now, his team had previously denied a media report that Prabowo intended to increase his debt-to-GDP ratio from under 40 % to 50 %. They vowed that the incoming president would remain to abide by the country’s current macroeconomic laws at the time.

Under those laws, the government’s budget deficit is capped at 3 per share of GDP and the debt-to-GDP amount cannot exceed 60 per cent.

Last month, concerns about Prabowo’s loans programs weighed on bond prices and the ringgit, helping to plunge the money to four-year lows.

During fighting, Prabowo had said he wanted to raise public loan amounts, while also pledging to increase the tax-to-GDP amount to 16 per cent from around 10 per share today. He did get department in October.

Prabowo’s campaign pledges were funded by Tempo newspaper, which reported Prabowo had formed a team to look into ways to remove the fiscal imbalance and debt-to-GDP roofs. His governmental affairs director told Reuters that there had never been discussions to close the fiscal gap and debt ceiling.